Joseph Stiglitz: The New World Economy

Oct 25, 2010Lynn Parramore

joseph_stiglitz-150This is the sixth and final installment of  "The Influencers,” a six-part interview series that Lynn Parramore conducted in partnership with Salon.

joseph_stiglitz-150This is the sixth and final installment of  "The Influencers,” a six-part interview series that Lynn Parramore conducted in partnership with Salon. She caught up with Joseph Stiglitz, Nobel laureate and the Roosevelt Institute's Chief Economist, to talk about the changing global economy. Stiglitz explains that while the US has traditionally been an economic superpower, it may have to forfeit that role.

Lynn Parramore: People have said that before the crash, the U.S. provided the world's consumer of last resort. How much has the world changed in that respect?

Joseph Stiglitz: Well, before the crisis, the United States was living beyond its means, and much of what it was spending beyond its means was consumption. It is still the case that the United States is living beyond its means, but the good news is that the households are now beginning to save. But on the other hand, the government deficits have actually increased. So the fact is, the U.S. is continuing to spend beyond its means. Now in the long run, this can't continue, and that is what is sometimes referred to as the problem of global imbalances. It changed a little bit since the crisis, but the fundamental problems that have given rise to it have not been corrected.

China is running a massive export surplus, and this is beginning to emerge as a political issue. What's your take on this?

Well, China's problems are distinctive, and in some ways just the opposite of ours. They have a savings rate of 50 percent. China's not the only country that's running large surpluses; Germany's running surpluses that are largely comparable as a percentage of GDP, and Saudi Arabia has surpluses that are also large. The focal point of the debate in the United States has been exchange rates -- concern that the exchange rate between the U.S. dollar and Chinese currency is distorted by government intervention on their part. Adjustments of exchange rate are not likely to fully resolve the problem of global imbalances. In fact, from 2005 to 2008, the time when the crisis occurred, China had basically increased the value of its currency by 20 percent, which is about two-thirds of what most people had thought was the exchange rate adjustment that was needed.

Even if China continues to allow its exchange rate to appreciate, it is not going to solve the U.S. problems. The U.S. will be buying apparel and textiles from Sri Lanka, Bangladesh. It's not likely to start making them itself. And so it is a shifting of blame to say that is the U.S. problem. The problems in the U.S., I think, are more fundamental. It does hurt Sri Lanka and Bangladesh to have an exchange rate that might be distorted in that way, but it won't resolve the more fundamental problems of America's trade deficits.

Policy-makers often talk about the U.S. as the world's indispensable nation. Is that consistent with how you view America's place in a post-crash world economy?

Well, America is still the largest economy in the world, and in that sense it is going to continue to be a central player. Even the most optimistic forecast for China's growth suggests that it will be a quarter century before China is comparable in size, and even then, China's per capita income will be markedly lower than it is in the United States. And I think the United States is likely to continue to be the source of innovation, the source of higher education. So, the role of the U.S. is going to continue to be very, very strong. But there was a short period between the end of the Cold War and the crash of Lehman Brothers where the U.S. was the superpower not only militarily, but economically. It had a very strong role in dictating the terms of international agreements. That position is not likely to be restored.

Let's talk about the U.S. stance toward the crisis in the European Union. The rescue is being done as a joint project between the European Union and the IMF. What's your take on the role of the IMF in a new world economy? There have been some proposals, for example, to restructure the IMF. What do you think about that?

It's very clear that the IMF has taken a much more constructive role in this crisis than in earlier crises. Dominique Strauss-Kahn as the leader has really changed many of the policies and orientations, talked about the importance of unemployment, the necessity to have counter-cyclical fiscal policies, so in that way there has been a very big change in the role of the IMF. On the other hand, there is concern that if the IMF could change so quickly in one direction, it could change just as quickly back to where it was, and that raises very fundamental issues about governance, the need for changes in governance to make sure they are reflective not only of the advanced industrial countries and not only of the financial sectors in the advanced industrial countries, but of a broader representation of views.

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Jonathan Schell: The Nuclear Paradox

Oct 18, 2010Lynn Parramore

jonathan-schellThis is the fifth installment of "The Influencers," a six-part interview series that Lynn Parramore is conducting in partnership with Salon.

jonathan-schellThis is the fifth installment of "The Influencers," a six-part interview series that Lynn Parramore is conducting in partnership with Salon. She sat down with Jonathan Schell, author of "The Fate of the Earth," Fellow at the Nation Institute and Distinguished Fellow at the Yale Center for the Study of Globalization, to talk about nuclear disarmament. They discussed America's conflicted stance, the obstacles to nonproliferation and the connection with global warming.

Lynn Parramore: Where are we today in terms of nuclear nonproliferation?

Jonathan Schell: I think you have two contending waves. On the one side you have President Obama's new commitment to the abolition of nuclear weapons, although he says that's not going to happen in his lifetime. He's framed that very much as a kind of weapon to use against proliferation -- most specifically against proliferation by Iran and North Korea. But on the other side you have a kind of counter-movement against that commitment within the U.S. government. And there are people in the woodwork of the bureaucracies who have struck back. The vehicle for doing that was the Nuclear Posture Review (a process that determines U.S. nuclear weapons strategy), and, to a certain extent, the new agreement with Russia.

Each has good things in it. I'm glad the numbers are coming down. I'm glad they've promised not to make any new nuclear weapons or have any new nuclear missions. But on the other hand, there are some things which are very disappointing and which do not really reflect at all Obama's commitment. In the Nuclear Posture Review there was a refusal to have a thorough-going renunciation of what's called "first use" -- in other words, refusing to have a no-first-use policy. What that means is that the United States still reserves the right in certain circumstances to use nuclear weapons -- even when nuclear weapons are not used or threatened against it.

If this country, with all its conventional superiority and so on, thinks that it can't be safe in the world without a threat to use nuclear weapons -- even against conventionally armed countries -- then what country in the world could say to itself, by that standard, "well, we're safe without nuclear weapons?" And most particularly, if you're a North Korean, or if you're an Iranian, and you're facing a very hostile and angry United States, you might well decide, "we need these things, too." So there's a kind of contradiction that's built in there. On the one hand, the United States is saying: "we're ready to do without nuclear weapons over some long term." But on the other hand, "we need them now, and we even need them against countries that don't have nuclear weapons." So in the contention between those two points of view, some direction will eventually emerge. But in my opinion, it hasn't really emerged yet.

Of course, I should have said, there are really three waves, because you also have proliferation itself. You have countries who are looking a little bit more interested in nuclear weapons. It takes the form of an interest in nuclear power. There are almost a dozen countries in the Middle East who are suddenly saying, "we're really interested in nuclear power." That's a way of keeping your options open for nuclear weapons. And so whether Obama's commitment to disarmament is going to be enough to bring to the table with the countries that are potential proliferators is very much open to doubt at this point.

What is your earliest recollection of nuclear danger?

I began my life as a writer as a reporter in the Vietnam War. That was way back in 1966. And the experience of being in Vietnam certainly set me on the path that eventually led me to thinking about nuclear weapons. When I arrived in Vietnam I really didn't know anything about the war. I didn't know the history and so on. But just from what I saw with my own two eyes it became apparent in the first day that this was a massive governmental enterprise that was absolutely making no sense of its own terms. It was radically and 100% mistaken. Shockingly so. It was self-defeat, which you could see every day, every hour of that war.

So it was the fallibility of government that struck you?

Precisely. It opened my mind to the idea that there could be vast governmental enterprises that most people were saying were sensible but were actually chaotic and made no sense whatever. I still believe that about the presence of nuclear weapons in our world. That was one way that I arrived at it. The other way was that when you looked into the reasons that the United States had got into the war in Vietnam, and, more particularly, the reasons why it couldn't get out -- the whole arena of nuclear strategy began to loom large. The way that worked, to say it very quickly, is that Vietnam was conceived as a so-called limited war. There was actually a "Bureau of Limited War" in the Kennedy White House before there was ever any major intervention in Vietnam. Well, what was limited war? What was the opposite of limited war? General war? That was nuclear war. So in a certain way, the fighting in Vietnam was an escape from the paralysis of the unfightability of the general war, which meant a nuclear war. Now these two things were joined at the hip in a paradoxical way, so it led me to think about it. That was a pathway into thinking about it.

How does attitude towards nuclear weapons reflect our evolution as human beings?

I now think that the nuclear dilemma is the first in an array of dilemmas that have arisen in which we discover the self-destructive potential of human life is unlimited. We've seen that most notably through global warming, but also through a whole other array of ecological threats including the incredible acceleration in the extinction of species in the rain forest and elsewhere around the world, and in the depletion of fish stocks and the whole multi-dimensional ecological crisis. So what we are finding is -- and again it goes back to my experience in Vietnam -- that many of the activities that seem to be our salvation or that seem to be positive turn out to have an unlimited dark side to them. They have their positive side, too, industrialization being an example, or the use of fossil fuels. It's great: We can sit here and have this conversation because we have a tape recorder that's fueled by fossil fuels, and so on -- your computer and all the rest. But to state what's now becoming clearer in an array of fields -- these sources of hope and betterment have turned out to have a dark side that really is without limit.

A nuclear holocaust is often described as "unthinkable." How do the limits of our imagination impact our ability to prevent such a catastrophe?

Well, it's a problem with many levels. I don't think that we have succeeded yet, collectively, to apprehend what is at stake here. After all, in some ultimate sense, it is the survival of the species that is at stake. That was put on the table in 1945; it became very acute during the Cold War. Now it's receded quite a bit, although the technical means are still in place. One problem -- and the whole arena is full of paradoxes -- is that with nuclear weapons present, you can't really fight a major power war. Well, that's a great thing -- not to fight a great power war. But one result of it is that you have no experience of nuclear destruction since Nagasaki. And so thought is given little to chew on. We're left with a lot of theory, and all nuclear strategizing is pure theory. Military strategizing used to be based on actual experience -- millennia of experience of war. But nuclear strategy is quite otherwise because there's never been a nuclear war. The Japanese didn't have nuclear weapons, so that wasn't a nuclear war.

So nuclear holocausts are relegated to science fiction movies?

Well, that's right. And now, we don't even have the Cold War. And yet the dilemma is there. These things are deeply embedded in our world. And we can see from the resistance that Obama gets -- or anyone gets -- who actually talks about eliminating nuclear weapons. They've become part of the furniture of the world. They've become domesticated and deeply lodged in our institutions and our thinking, and so on. And yet, they rarely are brought into consciousness.

On the flip side of that domestication is the romance of the idea of this world-destroying weapon. Do you think that's part of our attachment?

When the H-bomb was invented, they called it "The Super," and I think it was this use of "super" that put the word "super" in "superpower." So, the weapon is associated very deeply and primally with holding immense power. And that's of course a legacy of war itself traditionally throughout the millennia. The countries that had the best weapons and the best militaries and so forth were the most powerful. They could fight these wars and win them. It's no longer true with nuclear weapons. They turn out in actual practice to be rather a paralyzing influence than an enabling one. But I think that that deep association that's left over inappropriately from the whole tradition of warfare. Psychologically, it means that people still hold tight to these instruments of seeming supreme power even though they are nothing of the kind in reality or in experience.

What is the most dangerous illusion that we cling to with regard to nuclear weapons?

The idea that we can hold onto nuclear weapons while at the same time stopping their proliferation to other countries. That is an absolutely unworkable proposition. It just cannot happen in the real world. And that's why I think that Obama's pledge, or his commitment, that the United States is ready to surrender its nuclear weapons has to become something that's active and real in our world now. It's the only way we're going to be able to stop proliferation, including proliferation conceivably to a terrorist group.

Can human beings create policies big enough to deal with a threat as huge as nuclear weapons?

I think that in a whole array of areas, there really are new stakes on the table in politics. And the essence of it is the threat to the natural world. Only a part of it is the threat of the extinction or mutilation of our own species. So, really there's a new framework in which you have to consider political actions and political thinking -- and the nuclear weapon really was the first expression of that, the first manifestation of this new crisis, which is a crisis of the natural order, as I say. But now others have appeared. And so I don't know whether we'll find out whether we're able to act on that scale -- whether we're able to step up to the level of danger that we now live with.

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Eli Pariser: The Future of the Internet

Oct 13, 2010Lynn Parramore

eli-pariserThis is the fourth installment of “The Influencers,” a six-part interview series that Lynn Parramore is conducting in partnership with Salon.

eli-pariserThis is the fourth installment of “The Influencers,” a six-part interview series that Lynn Parramore is conducting in partnership with Salon. She recently talked to Internet activist and guru Eli Pariser, board president of MoveOn.org, a Roosevelt Institute Senior Fellow currently writing a book exploring an invisible feedback loop he calls "the filter bubble." They discussed the dangers of this sinister trend, along with net neutrality and the future of the Web.

Lynn Parramore: What is the filter bubble and why is it significant?

Eli Pariser: Increasingly on the Internet, websites are personalizing themselves to suit our interests. We all see this happening at Amazon, where if you order a book, Amazon will send you the next book. We see it happening in Netflix, but it's also happening in a bunch of places where it's much less visible.

For example, on Google, most people assume that if you search for BP, you'll get one set of results that are the consensus set of results in Google. Actually, that isn't true anymore. Since Dec. 4, 2009, Google has been personalized for everyone. So when I had two friends this spring Google "BP," one of them got a set of links that was about investment opportunities in BP. The other one got information about the oil spill. Presumably that was based on the kinds of searches that they had done in the past. If you have Google doing that, and you have Yahoo doing that, and you have Facebook doing that, and you have all of the top sites on the Web customizing themselves to you, then your information environment starts to look very different from anyone else's. And that's what I'm calling the "filter bubble": that personal ecosystem of information that's been catered by these algorithms to who they think you are.

Why is this dangerous?

We thought that the Internet was going to connect us all together. As a young geek in rural Maine, I got excited about the Internet because it seemed that I could be connected to the world. What it's looking like increasingly is that the Web is connecting us back to ourselves. There's a looping going on where if you have an interest, you're going to learn a lot about that interest. But you're not going to learn about the very next thing over. And you certainly won't learn about the opposite view. If you have a political position, you're not going to learn about the other one. If you Google some sites about the link between vaccines and autism, you can very quickly find that Google is repeating back to you your view about whether that link exists and not what scientists know, which is that there isn't a link between vaccines and autism. It's a feedback loop that's invisible. You can't witness it happening because it's baked into the fabric of the information environment.

Is this the new narcissism?

Yeah, and you know, these filters are coming out for totally legitimate reasons. There's a mass of information that we all have to deal with every day, way more than we can grapple with, and we need help. The Google CEO, Eric Schmidt, likes to tell people this statistic: From the beginning of civilization to 2003, if you took all of human intellectual output, every single conversation that ever happened, it's about two exabytes of data, about a billion gigabytes. And now two exabytes of data is created every five days.

So there's this enormous flood of bits, and we need help trying to sort through it. We turn to these personalization agents to sift through it for us automatically and try to pick out the useful bits. And that's fine as far as it goes. But the technology is invisible. We don't know who it thinks we are, what it thinks we're actually interested in. At the end, it's a set of code, it's not a person, and it locks us into a specific kind of pixelated versions of ourselves. It locks us into a set of check boxes of interest rather than the full kind of human experience. I don't think with this information explosion that you can go back to an unfiltered and unpersonalized world. But I think you can bake into the code a sense of civic importance. You can have a sense that there are some things that we all need to be paying attention to, that we all need to be worried about, where you do want to see the top link on BP for everyone, not just investment information if you're interested in investments.

How can we ensure that certain kinds of public information will be readily available to all users?

I think the change happens on a bunch of levels, and the first is on an individual level. You can make sure that you're constantly seeking out new and interesting and provocative sources of information. Think of this as your information diet. The narcissistic stuff that makes you feel like you have all the right ideas and all the right opinions -- our brains are calibrated to love that stuff because in nature, in normal life, it's very rare. Now we have this thing that's feeding us lots of calories of that stuff. It takes some discipline to forgo the information junk food and seek out stuff that's a little more challenging.

So that's one piece of it. I think the second piece is we've had institutions that have been mediating what we get to know for a long time. For most of the last century they were newspapers that produced about 85 percent of the news in that model. They were always commercial entities. But because they were making so much money, they were able to afford a sense of civics, a sense that the New York Times was going to put Afghanistan on the front page, even if it doesn't get the most clicks.

So newspapers found this kind of happy medium that didn't always work perfectly, but it worked better than the alternative. I think now the baton is passing to Google, to Facebook, to the new filters to develop the same kind of sense of ethics about what they do. If you talk to the engineers, they're very resistant because they feel like this is just code, it doesn't have values, it's not a human thing. But of course they're writing code, and every human-made system has a sense of values. And so, I think calling them to their civic responsibility is an important part of the puzzle.

There are some places where we need regulation. There's the idea that people should be able to control how the information that they're giving to websites is used and monetized in a more clear and powerful way. That's something that probably will need government action. It could be something as simple as this: Instead of requiring sites to have privacy policies that customers agree to, you could pass a law that says, "Here's a standard format by which customers can have their own policy for how they want their data used," and sites essentially have to read that code and abide by it. That would change a lot of things, as opposed to having the hundred-page Apple terms of service agreement that I just got on my iPhone that nobody probably has ever read in its entirety.

Let's turn to net neutrality. You've been at the forefront of harnessing the Internet in a way that allows ordinary people to participate in the political arena. Why is net neutrality important to a democracy?

It's extremely important because the Internet was built on the principle that it would carry all different types of data. And it didn't really care what kind of data it was carrying. It was going to make sure that it got from Point A to Point B. That's the Internet: There's kind of a social contract between all the machines on the Internet that says, "I'll carry your data if you carry my data, and we'll leave it to the people on the edges of the network -- to your home PC or the PC that you're sending something to -- to figure out what the data means." That's the net neutrality principle. It's really at the core of the founding idea of the Internet.

Now, big companies like Verizon and Comcast are looking at how the Internet is eroding their profit margins. They're saying to themselves, what can we do to get a piece of this growing pie? They want a tiered Internet where you can pay them to go to the front of the line with your data. That will really erode that amazing thing we all know the Internet facilitates: that anyone with an idea can reach the world. You talk to venture capitalists and they're scared. They say a new start-up is just never going to be able to buy the speed that a Google or a Microsoft will be able to. Incumbent industries will be able to get their data to you quickly and new start-ups won't have a chance. And as a result, you'll have a drying up of the entrepreneurialism that's happened on the Internet. And you'll have a drying up of the Wikipedias, the nonprofit projects. Wikipedia works because it's just as fast as Google. When Wikipedia starts to slow way down relative to Google, you're more likely to just go to Google. So that's a problem.

If you have the filter bubble and a non-neutral Internet, doesn't it become even harder to find alternative points of view and for the dissident voice to be heard?

Yeah, and you know, I think this isn't pessimism. This is realism. Tim Wu wrote a new book called "The Master Switch," which talks about how every new medium in telecommunications history has had a period just like what we've seen with the Internet. There was democratization and openness, and people have dreamed these really big dreams -- about the telegraph, about the telephone, about the fax machine. They dreamed it was going to connect us all together and transform everything, and that it could never be owned. Everybody has been saying the exact same thing about the Internet. This is like the eighth time we've been through this. The likelihood is that the Internet will be owned by a few large media companies. The question is, can we rally around this brief moment of incredible efflorescence of creativity and innovation, and say, "No, thank you very much, we want to keep it like this"? That's the project of the next couple of years.

Have we learned any lessons along the way about what remedies and antidotes are actually effective?

We're not learning. It's like every time it happens people sort of think it's totally different. The important thing to remember with the Internet is that there are large companies that have an interest in controlling how information flows in it. They're very effective at lobbying Congress, and that pattern has locked down other communication media in the past. And it will happen again unless we do something about it.

Lynn Parramore is the editor of New Deal 2.0, a Roosevelt Institute fellow and the author of Reading the Sphinx.

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Eliot Spitzer: The Crisis of Accountability

Oct 4, 2010Lynn Parramore

eliot_spitzer-100This is the third installment of "The Influencers," a six-part interview series that Lynn Parramore, the editor of New Deal 2.0 and a media fellow at the Roosevelt Institute, is conducting in partnership with

eliot_spitzer-100This is the third installment of "The Influencers," a six-part interview series that Lynn Parramore, the editor of New Deal 2.0 and a media fellow at the Roosevelt Institute, is conducting in partnership with Salon. She recently caught up with former New York Gov. and ND20 contributor Eliot Spitzer, whose new TV show, "ParkerSpitzer," will launch TONIGHT on CNN, and they talked about the crisis of accountability in American institutions. According to Spitzer, the failures of Wall Street are the symptom of an epidemic that his new show will explore.

Lynn Parramore: As attorney general, you brought a series of high-profile prosecutions to Wall Street. How do you compare their range and results to those following the financial crisis?

Eliot Spitzer: The paramount difference is that we tried to bring prosecutions that led to structural reforms. That was the idea behind the suit against AIG for using deception and fraud to elevate stock price, or the case against Merrill Lynch, where we charged analysts of offering investment advice influenced by gross conflicts of interest. It was important to challenge the whole structure of the banking and financial-services industry and argue for greater accountability. After the economic collapse, what I've seen so far are one-off prosecutions where you catch somebody for insider trading, for example. Given the systemic nature of the problems on Wall Street, the effort should be less on how to address violations in a particular case, but rather the ongoing structural issues.

You've noted that accountability is still a problem on Wall Street. Does the problem extend to other American institutions?

Absolutely. Disaffection of the public has passed from Wall Street to governance and beyond. There is a tremendous sense of failure in accountability in everything from nonprofits to for-profit entities to the whole spectrum of American institutions.

The scholar Viktor Frankl once suggested that the Statue of Liberty should be supplemented by a Statue of Responsibility. Are we striking the right balance between freedom and responsibility?

There is a second half of the equation that we tend sometimes to forget. And when that happens, there's a problem. There's the issue of communitarianism -- we need a sense of community and responsibility to each other that rises in parallel with a sense of the freedom of the individual.

How does accountability impact the legitimacy of our institutions?

This is hugely important. If accountability suffers, then institutions become highly suspect. This happens everywhere from Wall Street to Congress. When people feel no accountability, they are more hesitant to presume that the system is functioning. This affects the entire structure of our democracy.

Do you see anything on the horizon that makes you more optimistic about government's role in regulation that will impact the accountability crisis?

We're at a moment where the regulatory bodies are appreciating what they need to do. Elizabeth Warren, for example, will set a high bar in that regard. On the other side of the equation, you have the public's complete fury at government intervention in any way and the prospect that Republican takeover of Congress will eliminate whatever impetus there may have been.

How do you assess the role journalism has played in demanding accountability?

Journalism cuts both ways. Journalists have certainly shined light on major problems. But you also find examples of journalism that are less noble, that tend to diminish pubic understanding. Journalism really mirrors the rest of society. Its failures and triumphs come in waves.

Is this something you hope to address on your new show on CNN?

We're hoping to put a lot of energy in looking closely at institutions. Whether it is Wall Street or government entities, we want to ask the right questions so we can understand who is doing what. We also want to have guests who can help us understand what is happening to the middle class. And we want to understand the response of the middle class to real frustrations and the ongoing economic crisis. A lot of people say that given what the history is, the response of the Tea Party should not hold -- that they are learning the wrong lessons. The idea is that they shouldn't be blaming government, for example, when many would say that a failure of regulation is what caused the collapse. People wonder, Why haven't we learned the lesson that the enforcement of accountability in the private sector is a positive and critical role that government can play?

What are you most looking forward to in your new role as television host?

I'm looking forward to creating something that hopefully a couple of people will watch that is interesting, fun and informative. I've got a very long reading list to prepare for it -- more intense than anything I've had in my recent stint of teaching!

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Lewis Lapham: The End of Capitalism?

Sep 24, 2010Lynn Parramore

lewis_laphamThis is the second installment of "The Influencers," a six-part interview series that Lynn Parramore, the editor of New Deal 2.0 and Media Fellow at the Roosevelt Institute, is conducting in partnership with Salon. She talked to Lewis Lapham, the former longtime editor of Harp

lewis_laphamThis is the second installment of "The Influencers," a six-part interview series that Lynn Parramore, the editor of New Deal 2.0 and Media Fellow at the Roosevelt Institute, is conducting in partnership with Salon. She talked to Lewis Lapham, the former longtime editor of Harper's and the founder of Lapham's Quarterly, about the nature of American-style capitalism -- its beginning, its historical manifestation and, possibly, its end.

Lynn Parramore: Historically, what do you see as the dominant characteristics of America?

Lewis Lapham: It's faith in the spirit and mechanics and moral value of capitalism. It is a country of expectant millionaires. You have the notions of risk, of labor put to a productive use, deferred pleasure - ideas that come out of our Puritan ancestry. And Puritans, by the way, were also venture capitalists. The plantation in Plymouth, and then in Massachusetts Bay, was intended to bring money to its investors in London.

Capitalism is the promise - it's the bet on the future. It's the hope of a new beginning over the next ridge of mountains, around the next bend in the river. It gives the common man a chance. That's in the Declaration of Independence: life, liberty and the pursuit of happiness. The original wording was: life, liberty and property. But happiness and property were almost synonymous in the Calvinist mind!

Capitalism, as you mention, is future-oriented. Do you think it relies on historical amnesia?

Well, there's a new book called "Relentless Revolution: A History of Capitalism," by the eminent historian Joyce Appleby. And her argument - and I think it's probably true - is that capitalism is an historical phenomenon. It's not a given. It's not human nature. It arises at the end of the 16th century in Holland, but then is developed over the next four centuries for the most part in England and America. It's had a life span of four centuries.

Prior to, let's say, the 16th century, you had warrior kings who disdained commerce. Commerce existed from the very beginning - you have trading going on in Islam, in the Indian Ocean, in China ... this goes back thousands of years. But the hope of the government is stability, hierarchy, order, degree. People knew the stations to which they belonged, to which they were born. Until 1600, 80 percent of the people in England lived on farms, and there was no question of improving their stature. There was no place for their surplus labor to go until you begin to develop commercial venture, trade and so on.

But 18th- and 19th-century European imperialism is a dynamic of private enterprise rather than state enterprise. The Roman legions are in the service of the Roman so-called Republic, or Empire. But the East India Company is acting on behalf of its principal owners and stockholders and, to a certain extent, of the sailors. It's evolving toward our present sense of venture capital. The capitalist idea is to turn loot to a productive purpose - to yoke it to the wheels of industry. And this, of course, comes along, during the four centuries [17th century to present] with a steeply rising curve of scientific discovery and technological advance, so you get to the steam engine, the railroad, the iron smelter, the telephone, the radio, the TV, the Internet. We shape our tools, and our tools shape us. And by that shaping us, they shape our attitudes, our moral sense, our sense of self-interest. Competition is the spirit elixir of capitalism. This is not true in the more traditional society where the emphasis is on community, hierarchy, order, where people are terrified of starvation.

Do you think history makes us uncomfortable because it diminishes our sense of our own individual importance? Or the potency of our individual will?

I think the opposite. I think history is comforting because it reminds us that our situation, our circumstance, is not new. Other people have experienced far worse sets of circumstance than we confront at the moment. The world has, for all intents and purposes, come to an end many, many times. But people carry on.

People are always terrified of change. The idea was to try to keep everything just the way it was ... not to let the strings become untuned. Capitalism untunes all the strings. Capitalism is, as Appleby says, a relentless revolution. Joseph Schumpeter, the economist, in 1942 defined capitalism as creative annihilation - it wipes out entire industries. There's always a momentum for something new. A new way of doing something, a new way of making something. Again the tools shaping and reshaping us, which is what's happening today with communications, with the Internet.

So the American temperament -the capitalist temperament - is suited to that kind of change. Capitalism is based on friction, movement - the notion that every 20 years the matinee idols will be changed and the leadership will be removed and replaced, and that is the way it works. That, of course, when it begins to come into the world in the 17th century, is truly terrifying to people. This is largely the story of the English Civil War. ‘Behead the king' - that would have been unthinkable a hundred years before. But suddenly even divine right can be challenged. Constant questions. Constant new inventions. Improvements in navigation, machinery, chemical compounds and so on. And the characteristics - I keep getting back to your original question - the American temperament is made in that mold. For good or for ill. There's a very dark side to this.

Would you say that a chronic dissatisfaction is part of that dark side?

It's the impertinent dynamism of ‘more'. It is a voracious, devouring appetite for more. And if we're not careful, unless we get control of it, it will devour the earth. Capitalism had a particularly fertile soil in America because there was so much land available. People could just go west. Take land from the Indians by force. The same thing in Mexico. Call it Manifest Destiny, but it essentially was the seizure of property. There was an abundance of resources. Every man can become king for the day or make the Forbes 500. And it's the individual as opposed to the community.

Do you think it's any accident that an emphasis on romantic love has grown up alongside capitalism?

[Laughs.] Oh, wow. Yeah, the idea of the perfection of humankind ... to expect that romance and marriage and sensuous pleasure and good monetary terms can all be encompassed within marriage is an improbable proposition. But it's related to the romantic movement, which again is part of capitalism, which is within the 400 years of the capitalist emporium, and that goes along with the idea of sublime self-improvement and true love waiting with a rainbow just over the next hill at Aspen...

Hope springs eternal.

True!

You've spoken of using history as a weapon. How is it a weapon and against what forces would you like to deploy it?

Well, you deploy it against the dealers in fascist politics and quack religion. You deploy it against people promising miracles. It teaches you to rely on the blessings of experience, which is the great teacher, I think, as opposed to abstract outcome.

Is Lapham's Quarterly part of the arsenal?

Yes, Lapham's Quarterly is a small part of the arsenal. It simply means to foster an acquaintance with, and an interest in, the historical turn of mind. Not to know Cicero, not to know what happened before one was born is always to be a child ... to put yourself at the mercy of charlatans whether dealing in real estate or world conquest. It's gives you a sense that what your own story is - where you come from.

I spend a lot of time reading into the history of Elizabethan England in the first half of the 17th century, both in Europe and in America, and I can see where my politics are coming from. I can see my own fear of modernity - and by that I mean the devouring appetite of capitalist overturning - nothing lasts, everything is made to be obsolete. Everything is made to become a disposable, profit-bearing product.

The older hierarchal vision rendered beautifully in Shakespeare's plays and in Sir Philip Sidney's "Arcadia" - that political argument was lost in the Civil War in 1640. So I can see that my own politics are about 350 years out of date. But on the other hand, there may be a return to it, because capitalism was not inevitable. And if it is a historical phenomenon, that is to say, if it has a beginning, as with all other things historical, it will also have an end. With the population moving from 6 billion to 9 billion by 2050, and the continuing depletion of the world's resources - primarily water, but also oil and minerals of all kinds - to feed the capitalist notion of an endless feast constantly renewing itself is not in the cards.

Are we getting close to the last supper?

Yeah, I could see us getting close to the last supper. Unless we figure out a new set of ideas and new forms of behavior and new forms of value.

Appleby would say that reforming the system is what we should hope for. That's what a lot of the environmentalists say when they start talking about taxing carbons and treating the environment as a commodity in which you can trade as one would trade in other capitalist markets. I don't think that's true. Jared Diamond wrote a book a couple of years ago called "Collapse," in which he says that ideas, civilizations, in a state of decay cling desperately to the systems that are no longer functioning. And it's also probably true to say that capitalism in its stronger forms went out the window in the United States in the 1930s, because now, once you get the combination of government and business - I mean, speaking to Diamond's point - propping up a system that is essentially dead in the water is what we've done with the government takeover, the stimulus bill, the TARP. I suspect we're attempting to rescue a corpse.

And it might be best to let it die?

Let it die and hope that it will be replaced by something that we know not yet.

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Elizabeth Warren in Her Own Words

Sep 17, 2010Lynn Parramore

elizabeth-warren-150This is the first installment of "The Influencers," a six-part interview series that ND20 Editor Lynn Parramore is conducting in partnership with

elizabeth-warren-150This is the first installment of "The Influencers," a six-part interview series that ND20 Editor Lynn Parramore is conducting in partnership with Salon.com. In July, she sat down with Elizabeth Warren, pegged to help launch the new Consumer Financial Protection Bureau. **If you haven't seen it, also be sure to read Warren's folksy post on the White House blog about the appointment.

Lynn Parramore: What are some of the values that were instilled in your childhood that you would like to see emphasized now?

Elizabeth Warren: I guess it is a fundamental belief that people are doing the best they can. It is easy when you are successful to think that you did it all by yourself and to forget that you didn't. You got here because a lot of things broke your way. You were lucky enough to be born into a family that could afford to take care of you well. You were lucky enough to be able to have a family that could pay for you to go to school or buy your way out of scrapes. And to people who have had a lot of luck and don't acknowledge that -- the world looks like a total meritocracy, right? I'm on top because I really won, because I am better than everyone else.

I think I grew up with a profound sense of watching people who were good people, who were smart people, who were hardworking people -- God, nobody on this Earth worked harder than my mom and dad -- and they had very little. But they made do with what they had. They had their family, they raised four kids who loved them and four kids who all had our own families that we loved. And so, I guess the only way I can say it is that the value is in knowing that the game doesn't always come out fairly. There is a lot more going on. The material success at the end of the day is only a small part of it. Truly successful lives are about family.

Has your idea of fairness changed in recent years, particularly since the financial crisis?

I have been focused on the issue of fairness for 20 years now, ever since I started doing research on the economics of the middle class. I wanted to believe "work hard, play by the rules" equals success. I knew that my parents struggled, but I wanted to believe it was better now. And what I began to see in my research was that the rules were beginning steadily to work against the middle class. Healthcare, there's an example. It was not the case in the 1970s that a modest medical problem could land a family in bankruptcy. The advances in medical technology are wonderful, but the financial impact has become staggering. Sure, for one segment of society, the people with the gold-plated healthcare, the consequence of a medical problem is nothing more than medical. But for the much larger proportion of Americans, the financial consequences of a medical problem can be devastating. We studied these people in our bankruptcy research, and that's one that I regard as fundamentally unfair, not just in the sense that the Lord deals different cards to different people, and some get sick and some have babies too early. But unfair in the sense that any one of us could be hit, so why is it that we don't take care of each other? Why is it that we aren't more careful to make sure that none of us can be devastated financially by a medical problem? So, yeah, I've been studying the unfairness of how it translates into the economic insecurity of the middle class.

Is the middle class disappearing?

It is more that it is trembling; it is crumbling. Middle class used to be synonymous with secure, with steady, with boring, because middle-class people were people who were pretty much safe from the time they first started work on through retirement and until their deaths, no longer. Now, to be middle class is to worry, is to be insecure, is to face much increased odds of job loss, of a healthcare problem, of a family breakup that can land a family in economic collapse.

We need to get out of debt, yet there are so many forces that conspire against us. What is the way out of that conundrum?

It is a conundrum that has to be approached from two different directions. One direction is from the individual, the borrower, the family. My advice there is to do everything you can to protect yourself, and I have a whole list of things that I would identify. But that by itself will not be enough. There is also the part about the rules of the game, about collective action, about what banks are permitted to do, about what lenders are permitted to do, about how we finance, our healthcare, what housing policy looks like, what education policy looks like, what it costs to educate our children. For those, the appropriate place to go is to the policy forum, to talk to Congress, to talk to the president, to speak to people about how we can change the rules by which we all live. So, the way out of the problem is both on a highly individualized basis and also on a collective basis.

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Are you anti-debt?

No. Debt can be enormously valuable.

An example?

Borrowing money to buy a home - it can be a good investment. Borrowing money to buy a car so that you can get to work. Borrowing money to deal with an emergency, a serious medical problem. Those are all investments in effect in your future. But borrowing money because you can't live on your current salary, assuming you are not under some kind of emergency situation, this is your day-to-day, if you are rolling credit card debt over month to month to month, and this is your real job, this is your real life, you do have a serious problem. Because people have got to bring their expenses and their income into line with each other. And so, that is where I focus on debt particularly with individual families. This is the part you need to see. There is a red light flashing if you're carrying debt for reasons other than investment.

Why do you think you've become a lightning rod in recent years?

I don't know. I have to say I often think that the things I talk about seem fairly obvious. Maybe I am a little plain-spoken about it, but why should that bother people? Let's talk about the content of what I say. If you think I am wrong, tell me so and tell me why, and show me the data, show me the evidence, tell me the reason. Let's have a serious conversation about the content, about what has happened to the incomes of middle-class American families, about what's happened to their expenses on housing, on healthcare, on childcare, on college costs. Let's talk about how the business model of the consumer credit industry has changed. Tell me I am wrong on any of that. Let's have that conversation. But I sometimes have come to think that lightning rod is another way to say, "Let's change the conversation" -- let's make this all about something else. But let's not really talk about the serious issues.

Has our financial system become too complicated for a person with a high school or even a college degree to navigate?

I think complexity has become a strategy. Let me just start with your credit card. In 1980, Bank of America's credit card contract was just a little over 700 words long. That is a little over a page, easy to read. You could tell what the terms were. Today, credit card contracts can run 30 pages or even longer. And much of it is tiny, incomprehensible print. Now, why the changes? Well, part of it is regulation. A large part of it is that a complex document is one where it is a lot easier to hide the tricks and traps. It is a lot easier to fool people. No one realizes until after they've committed $5,000 on their credit card that the interest rate is no longer going to be 3.9 percent, but is going to jump to 28 percent.

In other words, complexity is itself a part of the business model. It is part of what keeps the customer from evaluating the cost and the risk, and it is part of what keeps the customer from comparing product to product, which would drive the prices down. So, from my point of view, complexity really is the enemy. The American people have to be in the conversation; they have every right to understand what their contracts are, they have every right to understand what policies their government is embracing, and if I can be helpful in that, I am glad to do so.

Speaking of complexity, what has surprised you most about working inside of Washington?

It really is an amazing place. I'm thinking that the thing that has surprised me most is how hard it is to have a conversation about substance. And it is too bad because it means that we are not all engaged in the same game of trying to make things better and that often to disagree is to declare mortal enemies rather than to say, "I don't see it the same way, I am seeing these data." And if you can't have that conversation, people can't change their minds.

What part of your work excites you most right now and going forward? What are you most looking forward to?

This is an historic moment. The president has just signed into law the most powerful financial reforms in three generations. And, coming out of that, it will be necessary to build the real apparatus to make markets work again, to make them work for families, to make them work, frankly, whether they like it or not. To make them work for Wall Street, to make them work for financial institutions, ultimately to make them work for the real economy. It is a moment in which there will be great change and I am simultaneously worried about what could go wrong but deeply excited and even optimistic about what could go right.

This post originally appeared on Salon.com.

Lynn Parramore is the editor of New Deal 2.0, Media Fellow at the Roosevelt Institute, and author of Reading the Sphinx, named a "notable scholarly book for 2008" by the Chronicle of Higher Education.

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