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  October 8, 2014

Top 400 US Billionaires' Wealth Equals Brazil's GDP


Rob Johnson comments on the Forbes report that the top 400 billionaires own $2.29 trillion of wealth, up $270 billion over last year
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biography

Rob Johnson is President of the Institute for New Economic Thinking. He was previously Director of the Economic Policy Initiative at the Franklin and Eleanor Roosevelt Institute and is a regular contributor to the Institute's blog NewDeal 2.0. He serves on the UN Commission of Experts on Finance and International Monetary Reform. Dr. Johnson was also a Managing Director at Soros Fund Management where he managed a global currency, bond and equity portfolio specializing in emerging markets. He was also a Managing Director at the Bankers Trust Company. Dr. Johnson has served as Chief Economist of the US Senate Banking Committee under the leadership of Chairman William Proxmire and was Senior Economist of the US Senate Budget Committee under the leadership of Chairman Pete Domenici. Dr. Johnson was an Executive Producer of Taxi to the Dark Side, an Oscar Winning documentary produced and directed by Alex Gibney.


transcript

Top 400 US Billionaires' Wealth Equals Brazil's GDPPAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore.

According to Forbes magazine, the 400 wealthiest Americans own $2.9 trillion of wealth. That's up $270 billion last year. That's about the size of the gross national product of Brazil, which is the ninth- or tenth-biggest economy in the world and has 200 million people.

So what does all that mean for the rest of us, this kind of concentration of wealth and concentration of power?

Well, now joining us in the studio is Rob Johnson. Rob is the president of the Institute for New Economic Thinking and a senior fellow and director of the Global Finance Project at the Roosevelt Institute in New York. He recently served on the United Nations commission of experts on international monetary reform under the chairmanship of Joseph Stiglitz. In the past, he served as chief economist of the U.S. Senate Banking Committee. He was also a senior economist at the U.S. Senate Budget Committee. And Rob was also a managing Director at Soros Fund Management, where he managed a global currency, bond, and equity portfolio. He's also one of the men who broke the Bank of England, and you can watch my series, Reality Asserts Itself, with Rob and get the whole story on breaking the Bank of England. But that's not what we're talking about now.

Thanks for joining us.

ROB JOHNSON, EXEC. DIRECTOR, INSTITUTE FOR NEW ECONOMIC THINKING: My pleasure.

JAY: So this is a tremendous concentration of wealth. It's also working very well for people in that 400. In fact, there was something like 113 American billionaires who actually didn't to make enough billions to be in the top 400. So it's really 513 billionaires.

You know, you and I have talked to many times (and I urge everyone, go watch my other interviews with Rob) about how dysfunctional this political and economic system is. But it's not dysfunctional for these guys. These guys are making a killing. What possible motivation would they have for any change?

JOHNSON: Well, there's an old story about a guy that jumps out of the Empire State building. And when you get the 19th floor, you open the window and say, how you doing? And he says, fine so far. I think increasingly those billionaires and other wealthy people know that we're on an unstable trajectory, that the system is dysfunctional, the system's broken, and we are heading towards social conflict. Social conflict can take the form of more repression, military equipment, intimidation, incarceration. As you know, the prison population, particularly black male population, is exploding, and America has a tremendous eyesore associated with the incarceration of black males. But there is a sense in which if you have wealth or if you have the knowledge to create wealth, say, like an engineer at Apple Computer, you've got to be scared that it isn't going to go on, you're not going to be able to reap the fruits of your talents and your wealth unless we adjust course. I think wealthy people have to change course now. It's not sustainable.

JAY: It may not be sustainable, but don't on the whole certainly the billionaires and most of the multimillionaires--and not all the billionaires, but most--they don't see that they're going to go--they may be okay when they get to the 19th floor, but they think it's going to take more than their lifetime to fall all the way down, and their kids are going to be okay, 'cause they're going to live in gated communities and they're going to have so much money, and yeah, maybe the world in the long term is going to hell, but après moi, le déluge--you know, the floods may come, but you know what, I'm alright, Jack--'cause, frankly, there's no evidence that they're acting otherwise.

JOHNSON: Well, they have, as you talk about, enormous wealth. So social services, education, health, transportation, and security, they don't rely upon governments to provide them any longer. The other question, and what Samuel P. Huntington called "Davos man", is: do American executives need the American people to be healthy and well educated in order to make a profit? Henry Ford did. They may not believe they need to any longer in this multinational world where "Davos man" is not really associated with anything other than maybe the United States Armed Forces protecting the sea lanes and global free trade.

JAY: Yeah. It hit me--I made a film in Afghanistan in 2002, and I was just in a restaurant outside of Kandahar, and I saw these guys who could drive the most modern big transport trucks, work Kalashnikovs and modern weapons extremely well, and did not know how to find Germany on a map, in fact, weren't entirely sure the earth was round. Taliban had so destroyed the public education system in Afghanistan, there was no--most of them had actually never seen a map of the world. But they could still do their function. And it's not as exaggerated in the United States, but, yeah, I agree with you that the need for an educated public, especially, like, in terms of knowing any history, is off the table.

JOHNSON: Well, one of the big concerns that I have and many people have is that education is not just an input to production. Education is an input to an informed and vital citizenry. And the so-called plutocrats now run the government, and they might even be afraid that if the uneducated population were to formulate a democracy, it would malfunction as well. But we need to invest in education, we need to have faith in that democracy, and I think we need to change course very, very abruptly. Regarding the costs of health, we have budget problems, but billionaires are not attacking the bloated health care system the charges twice what everybody else in the world does. We're not talking about the whole world paying for the military budget to keep the sea lanes open. We're talking about the American people who don't infrastructure, don't have schools, and pay twice too much for health carrying that on their back. That is not a sustainable solution. That isn't going to cohere. When you go to other countries, you go to places like China and India, and they look at America as the leader of the world now, they see the United States sputtering, they see it breaking down, and they don't think our design coheres. Our billionaires, for the most part, are smart people. Sometimes your intellect is clouded by what you might call the emotional--what you might call force-field of greed or what have you. [crosstalk]

JAY: But even the ones that act a little more enlightenedly, like a Gates or a Warren Buffett, who give away a lot of their money and a lot of the philanthropy--I've never investigated directly, but it seems to me a lot of it does some good. But they don't--and I think they're not capable of questioning some of the fundamentals about who has wealth and who has power, 'cause they still want to be the benign lords instead. They don't want to become malignant lords, but they want to be benign lords. But they still want lords.

JOHNSON: And I sense that, I sense that some of them, how you say, don't trust in a system of justice unless there are concentrated overlords who provide that from a benevolent spirit. They may project a benevolence of spirit that's unwarranted. It's self-flattery, but this is a very, very powerful challenge to them. Martin Luther King really stood up and talked about this, that what we need is not charity, which is clean up after the mess of the system; we need a just system and a reformed system and a balanced system. And at that time, many people in America were celebrating a rising middle class. It did not apply to the black population like it did to the white population, and particularly to white males. And I think at this juncture the question of how much charity, as opposed to just call it progressive taxation, should be used to recycle that wealth--and where is the locus of decision-making about how that wealth should be redeployed?

JAY: Now, you're running--one of your hats is running a think tank sort of thing for George Soros called INET, Institute for New Economic Thinking. You're traveling the world all the time. You're constantly talking about how unsustainable this current system is. What are you hearing back? 'Cause you're talking to very influential people.

JOHNSON: I'm hearing back that we are on an unsustainable financial trajectory, the financial system has been unmasked as unstable and unfair, and that that contributes to inequality. Inequality, part of which comes from the operation of the financial center, is a formidable, formidable cause of sociali instability in the medium-term. Whether you're talking to intellectuals like George Stiglitz or Tom Piketty, or whether you're talking to donors, environmental concerns, financial system coherence, and governance coherence, the international system doesn't function. Multinational corporations are so large in relation to people that they can arbitrage and protect themselves across different segments of society, meaning China or Iowa versus Michigan or what have you. They can unseat the power of local governments by threatening to leave or for rich subsidies being drawn it.

But all these tensions that have to do with governments also leaves these elites talking as though, I know how to protect myself, I have enough money, I have enough lobbying power, I have enough to protect myself from being who pays the bill, who bears the burden. But they don't have any believe that they individually have the power to impart a new design that's healthy for everybody.

I've talked to many, many people--'cause I use to work in Washington--who say, I have to go compete, I have to be part of the lobbying system; God I wish somebody like President Obama could stop us all and put it back to what you might call a fair game. But as long as I don't believe that that fair game exists, I have to stay in there and keep pushing.

JAY: And with the lobbying power, even if there was someone in Washington who actually wanted to do something, 'cause I don't think Obama was ever much more than someone who represented Wall Street, the amount of power they have over Congress, like, these same people that said, I wish somebody would come in and do something, they're lobbying like mad to make sure nobody does do anything.

JOHNSON: Yeah, they are. But they feel like they're big in terms of protecting themselves, you know, manipulating the right congressional committee, what have you, but small in the what you might call incapacity. They feel powerless to effect a coherent design for the United States and for the world. When they say, I'm moving my plant to China because the labor conditions aren't so good and the environmental conditions are nonexistent, they say, I'm doing that to survive because I know the German companies and the Swedish companies and the Swiss companies are doing the same thing, and if I don't do it, I'll get driven out of business.

JAY: Okay. So if I would think the preponderance of elites, the majority of these billionaires and others doing very well, I mean, a lot of them straightforwardly support the Republican Party or they support the most corporate part of the Democratic Party. They're not looking for change. But the section that kind of does and throws up their hands, well, I can't really do anything, so where does change come from? It doesn't come from them.

JOHNSON: Well, I want to take issue for a second. I know a lot of who are Republicans, and they appear to me just as worried as Democrats. They might have a different prescription about how to stabilize the system, but they think things are way off course too. They're quite afraid.

JAY: But those kinds of Republicans are pretty marginalized in the Republican Party.

JOHNSON: I don't know. I don't know. I would say there are a number of people who just say that what you might call Democratic liberal wealthy people are romantic and delusional or not fixing the system but pretending that government can fix the system.

JAY: But their fixing of the system on the Republican side is more free market, supposedly, 'cause they all believe that--.

JOHNSON: I think there are a lot of things that people who support Republican politicians are doing that are very toxic. And you know I used to work for Pete Domenici in the Republican Party on the budget committee. I don't think it's the same Republican Party that my parents admired. It's not the same Republican Party that Pete Domenici, Howard Baker--Bob Dole was considered a conservative then. He would be considered on the left wing of the Republican Party in the current age.

JAY: So what I was getting at is there is no evidence that any serious solutions are going to come from this elite. Even people like you or people like George Soros and others who have been screaming about--I mean, I remember--we were invited--we went to one of the INET conferences in Bretton Woods, and George Soros opened it, and he looked out at the audience, and his first thing he said is, "I'm bewildered", saying that this is going to be a shipwreck and you cannot get anyone--.

JOHNSON: You can't see light at the end of the tunnel at this point.

JAY: Yeah, and you can't get anyone's attention to do something about it.

JOHNSON: That's right.

JAY: So, then, for ordinary people watching this--and, frankly, almost our audience is ordinary people. I don't know if we have any billionaires that watch us. I hope we do, and if if we do, you've got to be donating, billionaires. But what should people do? 'Cause the solution is not going to come from the people on this 400 list, and they're the ones that have political power.

JOHNSON: My sense right now is that in order to shift the balance in our society, it will not come from a change of spirit of frightened billionaires. It requires participation and collective action among a broad base of the population, including the college-educated. They can't act like if they just play along, the billionaires going to take care of them or what have you. Everybody can smell things aren't working. Everybody needs to be active. And if--let's call it 75 percent of the population is active like in the old days when A. Philip Randolph tried to inspire in the "freedom budget" for all Americans, if people start to say, we need decent health care at a decent price, we need infrastructure repair, we need housing, we need schools, we need food security, and they push--and I'm not talking about writing an email or Twittering or something; I'm talking about arms and legs action, the kind of stuff like Bill McKibben did vis-à-vis the Keystone Pipeline, people getting arrested, people outside in the streets, peaceful demonstration but persistent, unyielding, broad-based--that, I think, changes the fulcrum of accommodation versus resistance--not without a few scuffles. I'm not trying to be, you know, rose-colored glass about this, but without the backbone of the population, which came up to the surface during Occupy, but if it's not systematic and persistent, joined by intellectuals, joined by young people, I don't think--I think we'll continue on this unstable trajectory to a perhaps more dangerous and authoritarian place.

JAY: That's what I was about to ask. What do you think the political consequences of this kind of concentration of wealth are?

JOHNSON: I think that they are quite demoralizing, quite adverse and, how would I say, I don't think it leads to stability. It may lead to intimidation and authoritarian practice for a time, but those things just what you might call build the wellspring of resentment. And that in itself is not stable. It's just buying time. It's buying time like you described to me earlier in this segment, of people saying well, my kids will be fine and my gated community's fine.

When I was younger, people used to ask me, if I could do one reform that America, what would I do, and I said, I would outlaw private schools.

JAY: I'd add, I think that's a great one.

JOHNSON: And the reason is simple. When the wealthy and the powerful people have no resort to private education, they are forced to figure out how to repair something, and the rising tide raises all boats for our citizens.

JAY: It's the same argument--.

JOHNSON: Just so your viewers know, I have two children in private school now. I have two other school children who've graduated from private school. So I'm coping with a dysfunctional system. But if you took away from all of us, the political mobilization to improve the public school system would be that rising tide for all of us.

JAY: I'd like to add one other thing, a serious estate tax. You've got to stop this inherited wealth. I mean, the only way to break up these massive fortunes and one of the only ways to break up these massive fortunes is they just can't get passed on. You've got to really break them up into [crosstalk]

JOHNSON: You know, Bill Gates' father worked on a book once called Wealth and Our Commonwealth, which was about this very thing. And when I studied what was unfolding in their group--I believe it was Bill Moyers who alerted me to that work--many argued that it was actually selfishness by the parents in terms of their ego needs to provide these billions and that there was very little recorded history of children with billions inherited who were happy people. They inherited a burden.

JAY: Unfortunately, a lot of those people are running the country.

Thanks for joining us.

JOHNSON: My pleasure.

JAY: Thank you for joining us on The Real News Network.

End

DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.



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