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[piano music] ♪ hello everyone.my name is marshall goldberg, and as a member of the trudy sundberglecture series planning committee, i will be your host this evening. i'd like to start outwith a hearty welcome to all of you forattending this event. this is the first trudy sundbergmemorial lecture in what will be an annual series

designed to promote civic engagementand lifelong learning, while covering national and globaltopics of interest to the people of whidbey island. as some of you know,trudy sundberg was a beloved, unforgettable whidbey island teacherwhose passion for education, literature, history, the arts, civic involvement,and politics touched many lives. tonight's event honorstrudy's spirit and her memory. my sincerest thanks go outto all of you, the audience, and to the many contributorsto the trudy sundberg memorial fund

for making this lecture series a reality. this event is made possiblein part by the supportof the sno-isle libraries foundation and by a grantfrom humanities washington, a statewide nonprofit organization which is supported by the nationalendowment for the humanities, the state of washington, and contributionsfrom individuals and foundations. for those who don't know him, hedrick smithis a renowned public speaker

and authorof several best selling-books. one of them, "the russians,"has been translated into 16 languages and has been widely usedin university courses. another book, "the power game,"became bedside reading for a president and a bible for newly elected membersof congress and their staffs. as a new york times reporter,mr. smith was a member of the news team in 1971 that brokethe pentagon papers story, which won him a pulitzer prize. [applause]

in 1974 he earneda second pulitzer prize for reporting on the soviet unionand its allies. mr smith has also wontwo emmy awards for his documentarieson pbs' frontline. tonight mr. smith will discusshis most recent book, "who stole the american dream?" a detailed analysis of the growing gapin income and wealth in the united states which began in the 1970s. and now i have the pleasureand the privilege

of presenting to you hedrick smith. i want to say what a pleasure it isto be on whidbey. my wife is sitting here somewhere.susan? could you stand up? i introduce her becausewe are neighbors of yours. some of you know it.most of you don't know it. we have a summer home on orcas.we have family in west seattle. we're excited that our granddaughterhas just decided to go to the university of puget soundcoming out of high school. so we feel very connectedto this community.

so for me, uh, this is much morethan just a talk and a lecture. this is a way of kind of connectingand communicating with neighbors. um, we want to talk about america. i think trudy would have wanted usto talk about america, to think about america. i want to use the electionfor a moment and talk about the election. but not about delegate counts and not abouthyped convention scenarios. i want to use the electionfor a moment as an mri on america.

what does the electiontell us about us? what does it tell usabout this country? this has been a wild, shocking,turbulent, upsetting election to a lot of people. shocking. i can't rememberas turbulent an election in my experience as a reporteruntil i go back to 1968, half a century ago, which was a really --in the midst of the vietnam war. this is an election that has changedthe norm of american politics. normally elections are foughton the spectrum of left versus right,

conservative versus liberal,republican versus democrat. the axis in this electionis bottom-up: up-down, not left-right. this election is about a mutinyof common middle class americans against the power elite. ok? this is small donors against super pacs. this is main street against wall street. this is the 99% against the 1%. it's -- the gut issuein this election is inequality. but not just inequality of income,

inequality of power, inequality of who gets to decidewhat the agenda of the nation is, inequality of who the politiciansin washington or olympia and other placeslisten to, inequality of who benefits mostfrom our foreign trade agreements, inequality of who benefits mostfrom the growth of our economy, inequality in the deepest sense there is. we're a deeply divided countryin america now -- divided by money, certainly,the 99% and the 1%;

divided by power;and divided by whom we trust. look what happenedin the republican campaign. a whole bunch of governorswho were time-tested in office, in elections, supposedly knowinghow to connect with the voters, got cast aside,and cast aside pretty easily. why? because ordinary americanstoday no longer trust what c. wright mills in the 1960scalled "the power elite." let me repeat that:people don't trust the power elite. that is a very big partof what this is about.

we're not just talking aboutpersonalities. we're not just talking abouttrump and sanders. we're talking about a phenomenonin which those two candidates have tapped into what is churningin the belly of this country, which is a deep-seated angerabout the inequity of our economy, and a deep mistrustand a disenchantment with what people regardas a broken political system. this is not an ordinary election.this is a very, very serious election. it's telling us somethingvery, very serious about this country.

you know, we think of washington, we think of a polarized,paralyzed power system. when i think of it,just to give you a light moment, i think of the peanuts cartoonthat's one of my favorites. its the one where lucy sets upa card table in the backyard. it says "psychiatry: 1 cent." and you know who comes up,puts his penny down. charlie brown comes up,puts his penny down. and lucy says to him,"charlie, before i can give you advice,

"before i can do therapy with you,i need you to think of life "as a voyage on a great ocean liner. "now there's some peopleand they take their deck chairs "up to the bow to look into the future,where they're going. "and there are other peopleand they take their deck chairs "to the stern, and they look backto see where they've come from. "which group do you belong to?" charlie thought for a minuteand he said, "lucy, "i'm having troublegetting my chair unfolded."

[laughter] that is -- i mean,your laughter says that is what we think ofwhen we think of washington. they can't get their chairunfolded there. it doesn't matterwhat the issue is, right? but it isn't funny.it isn't funny to us. let me share with youwhat john gardner said. john gardner was a republican who was in the cabinetof lyndon johnson

back in the 1960s, and laterfounded common cause. before john gardner diedand before the 2008 financial collapse and the downturn, the great recession,john gardner said this: "we are treading the edgeof a precipice here. "civilizations die of disenchantment. "if enough people lose faithin their society, "the whole venturebegins to fall apart." he didn't say the party's gonnalose the next election. he didn't say we're gonna havea downturn.

he said civilizations fall apart. ladies and gentlemen,i believe we are in that sphere. the politicians and the punditsand the press and the pollsters love to look at ratings of whetheror not the president is up or down, republicans are up or down,congress is up or down. we in the media, we're down,right down there with everybody else, low rating.that's not really what matters. what matters is when they askpeople's confidence in the american political system,

it is at a low pointfor the last 40 years. a low point to the last 40 years. one poll that i sawsaid that 60% of the american people believe america is in decline. america is in decline.it's seen its best days. our kids and our grandchildrenare gonna be worse off than we are, as a whole country.that's a phenomenal judgment. it's a very perilous situation.that's what gardner was talking about. and when i saw that,it took me back

to some of the readingthat i did in oxford after i finished williams. and i read some of the material from arnold toynbee,the famous british historian who wrote a 12-volume historyof the world, 6,000 years, 21 civilizations,12 volumes. i want to admit right off the bat,i did not read all 12 volumes. i read a two-volume abridgment,and each of those was 1,200 pages long,so i read quite a bit.

but what's interestingand what's relevant for us today is what toynbee didto try to understand the rise and the fallof civilizations. and he did it in terms ofchallenge and response. all civilizationsare faced some way by a challenge,or by many challenges. and whether or not they surviveand thrive and last depends upon how well they respondand how appropriately they respond. well, he starts way backand he starts with a challenge

that maybe you'd think of,but i sure didn't think of. and he starts with ancient inca peruand ancient egypt, and the challenge they faced,he said, was environmental. they facedsuch a hostile environment, the question was,could they establish a sufficiently strong and vibrantagricultural economy to support a civilization?well, we know they succeeded. you can go to peru and seethe temples at machu picchu. they obviously generatedenough wealth

not only to feed themselvesand to live among themselves, but to build those magnificent templesthat have lasted for centuries. and the same thing is trueup and down the nile. but those two civilizationsfell victim to another challenge: the challenge of a strongermilitary outside invader. in the case of peru,it was the spaniards. in the case of egypt,it was the ottoman turks. and so those societiesfell into disrepair and eventually declined.

that's a challengewe are familiar with: an outside military challenge. we faced it in hitler. we faced it againin the long cold war with the soviet union. and add in anideological challenge as well asa military challenge. but when you lookat the two civilizations that we most admire in america,

ancient greece and ancient rome, they fell victimto another kind of challenge. it's a challenge that toynbee calls"schisms in the soul of the society," schisms in the body politic,internal divisions that gradually weaken and drag down the civilizationuntil it falls slowly in to decline. and if there is a challengethat we face that is very difficult for us to find the answer to,that is it. our challengeis the challenge from within ,

not the challenge from without. so that's what i want to talkto you about tonight. now, when we take a lookat america today and we see the inequalitiesand we see the problems, we see the mess, there is a question:can we reclaim the american dream? can we get back up on our feet?can we pull together? and one of the things i doas a reporter is to try to understandwhat's happened in order to figure outwhere we might go;

not just to go racing offinto the future but to take some timeto go back into the past. and when i go back into the pastand i think about america and i think about my own experienceand my own life, coming out of college in themid '50s and so forth, there was a time it seemed to mewhen our politics worked. yes, republicans and democrats fought.they fought in every election for the control of the white house,for the control of congress, and so forth. but you know,dwight eisenhower would have

lyndon johnson(the majority leader of the senate) and sam rayburn(the texas speaker of the house) down, and they would drink branch waterat the white house at the end of the dayand they would try to figure out whether or not there waslegislation they could pass. and there was a timewhen, literally, lyndon johnson as the democratic majority leaderof the senate took a bill from eisenhower, and because his own republican leader,william knowland of california,

wouldn't fight for it on the floor, johnson fought for a billproposed by eisenhower. can you imagine that happeningtoday? can't imagine it. that's what i mean about politics working.we sent a man to the moon. we built the national highway system.we passed medicare and medicaid. we passed the civil rights legislation.we passed budgets every year. we don't pass budgets anymore.do you know that? you may think occasionallywe pass a budget, but we don't. we pass a thing calleda continuing resolution.

a budget is a --is a collective effort to figure outwhat our national priorities are and to put together a budgetthe way a family does and says, "this is howwe're going to spend our money." a continuing resolution is an admissionthat we can't come together and we're just going to continue to dowhat we have been doing. it is a failureeven when it's a success, ok? so there's a huge difference betweenthen and now in that respect. secondly, i recall -- or it seemedto me as though i recalled --

that there were considerabledifferences in the economy. we had poverty,we had ups and downs in the economy, but we seemed to havea sort of shared prosperity, a sense that everybodywas sort of -- you know, they saya rising tide lifts all boats. there was a sensethat as the economy grew, everybody's boat was being lifted. but i said to myself, you know,"smith, you're white-haired, "and white-haired peoplehave a tendency to say,

"'you know, when i was young,things were ok.'" lyndon johnson would say,"boy, just do it the same way "we did it when i was youngand you'll be all right. you'll just be all right." so i thought i'd better go backand check. i did. from 1945through the end of the 1970s, the productivityof the american workforce, that which is the engine of growth,that which drives living standards up, rose almost double,97% over a 30-, 32-year period. and the median hourly wageand benefits

of the average worker in americarose 95% -- 97 and 95. what that means isthe growth of the economy, the efficiency of the economy,the profits of great american corporations got passed through the peoplethat were right at the middle of society. that's pretty successful. also, economists like tocut us up into quintiles: top 20%, second 20%, all the waydown to the bottom 20%. and if you look at the numbersfor those groups, the average incomewithin those groups

all moved up kind of together,up and down but they moved up together. in fact, the bottom two quintilesactually gained more over that periodthan the top quintile. now i'm not suggesting for a momentthere was income inequality or that there should be. charlie wilson,who ran general motors at that point, made 35 times as much,maybe 40 times as much as the average general motorsassembly line worker. but they were withinshouting distance of each other.

today standard & poor 500,standard & poor 300 ceos make roughly 300 timeswhat the average worker makes. tim cook, two or three years ago,the ceo of apple made $139 million in one year. he made more than 4,000 timesthe average apple worker in this country. and the average apple workerin this country, if you ever go into an apple store,is a college graduate. they're the ones who tutor youon how to use your cell phone, how to use your laptop.these are smart kids.

he's making 4,268or something like that times that. it's totally out of whack with what they hadback in the '50s and '60s and '70s. so my question then is,how the hell did we do that? we're not talking socialismand we're not talking communism. we're talking american capitalismin two different eras. very important to keep that straight.american capitalism. well, i found outtwo things are important. and by the way in historytwo things are always important:

ideas and power. ideas and power. we tend to think very much about powerand we don't think so much about ideas, but ideas are critically important. the idea that was critically importantat that time was somethingthat a lot of people call -- who study thiscall stakeholder capitalism. it was the ideathat the ceo of a major company had a moral responsibility,an ethical commitment, to balance the economic interestsof all the stakeholders in the company.

of course, that meant the owners,the stockholders. it meant the managers.it meant the employees. it meant the towns and counties in which the companyhad its offices or its factories. it meant the banksthat loaned it money. it meant the customerswho bought the products. it meant the supplierswho provided the spare parts and all the componentsof whatever they manufactured. and not only that,the ceos at that time --

and i've gone back and i've readwhat charlie wilson said and reg jones at general electricand irving shapiro at dupont and remington at coca-colaand on and on and on. i've read what they said.they thought it was smart business. they thought it was good economics.their idea was -- and economists call thisthe "virtuous circle of growth" -- they thought it was smartto pay middle class workers well because middle class workers in americabasically go out and spend their money. in good times, middle class workersspend 95% of their pay

and they invest about 5% in their housesand a little bit for retirement and maybe somethingfor their kids going to college. and in bad times,they spend 105% of their pay. so they go in to debt, right?we know that. so they believed this was it.and in fact, it was. that was the engine that drovethe enormous growth of this economy for 30, 35 years. and then what happensin the late '70s is a change of ideas and the rise of what i callwedge economics.

and i'll get to that in a moment,but let me go to the other point: power. this is very importantfor where we are today. power. citizen power. if you look at the '60s and '70sin america, it is a period of citizen power. it is a period in which trudy sundbergepitomizes what was going on. my first exposure to itwas with the civil rights movement. i happened to be in nashville, tennesseein february of 1960

when the sit-ins began. i was down in alabamawhen the freedom rides began. i was in birmingham, alabamawhen martin luther king was there marching and got arrested.i was at the march on washington. this was an explosionof african americans protesting that they wanted into american society. now, people think of protestsas simply something that's angry. but think about it. protests are enormously idealistic.

you don't protestto make something better unless you believethat it could be better. and it could be better becauseyou are taking action to make it better. so that's a period of idealism. and around the same time,the women's movement gets started. betty friedan writes"the feminine mystique" 51 years ago. 1963, john f. kennedy signsthe first anti-gender discrimination about the economy. this is all movingbecause women are saying,

"we're making 41 cents on the dollar "for doing the same workas men. it's not fair." and shock of all shocks,women decided to go braless and most of us mendidn't know what to do with it. you know, we were a little puzzled here.what's going on here? somebody is really attractive,you say, "wow." and then you say,"well, what are they doing?" they're saying, "notice us." "if we gotta go braless, notice us,because you're not treating us fairly."

we're not all the way there today,but we're 80% there. we're now making -- they were nowmaking on the average 80, 81, 82 cents on the dollar.we gotta go further. but there are more women in congress,there are more women ceos. things are changing.things have been opening up. and guess what?we got a woman running for president. not unimportant, right? so things have changedbecause of citizen action. there was a consumer movement.

ralph nader wrote a bookcalled "unsafe at any speed." what was he saying?shock of all shocks, detroit is making carswith mechanical defects -- does this sound familiar? -- causing accidents that aremaiming and killing people. and people got outraged about it.outraged. they protested. and then women were going into storesand they were picking up the box of cereal or the box of soapthat they bought last month. and this box was bigger but itseemed as though it weighed less.

and shouldn't there besome kind of weight standards? and by the way,what's in the box? couldn't we have honestyin labeling? if you go in to a grocery store todayor a drug store, and you turn the product overon the back and you look to see what it's got in it,whether you want to put it in your mouth, put it on your face,feed it to your family, use it, you can thank those peoplein the 1970s because they putso much public pressure

by demonstrating --physically -- on congress that congress changed the laws, and so didthe food and drug administration. and then take somethingso precious -- excuse me -- somethingso precious in this state, this gorgeous pacific northwest that susan and i loveright along with you, the unbelievable blue skiesand those dark green evergreens, you know, and the white topsand looking today

over the olympic peninsula and seeingthe olympics is just stunning. or mount baker just glisteningthere in the afternoon sun. it's just unbelievable. do you know what day we just passed? does april 22nd mean anythingto any of you? earth day. did you notice anythinggoing on around here on earth day? were there demonstrationsor anything like that? anything going on? eh, a little bit.

april 22, 1970, 20 million americanswent into the streets. 20 million americanswent into the streets, went to college campuses,went to shopping malls, went to congressional offices,went to state capitols, went to the mall in washington,got on the radio, got on television, had talkathons,demanded the cleanup of the water and the airin this country. and within one year,within one year, 12 months,

congress passed seven major piecesof environmental legislation: the clean air act, the clean water act,the safe drinking water act, the anti-toxic substance act,on and on and on, all but one of them signedby that great environmentalist, richard nixon,the republican president. you all know bill ruckelshaus.he's from seattle. he was the first head of theenvironmental protection agency. he's a friend of mine. i've known him, i've talked to him,i've interviewed him on television.

i did a documentary some years agocalled "poisoned waters" about what's happenedat puget sound and chesapeake bay. and at that time i said to bill,"did i miss something? "was nixon a closet greenieand i just didn't get it?" and he said, "rick," he said,"in all the years i worked for him, "nixon never asked me once,'bill, is it really bad out there? "'is it really true that if you put your arminto the potomac river "'it comes outcovered with green slime "'because of the algaecaused by chemical pollution?'

"no," he said, "the one thing," he said,"i remember nixon saying to me, "he said,'when you get over there to epa, "'don't let the bureaucratsover there at epa capture you.'" thank you for the laughter. nixon was the only personin washington who thought the acronymfor the epa, an agency which he himselfhad created, he thought it was epa. so i said to ruckelshaus,

"so why did he do it?why'd he sign all that legislation? he said, "he did it becausethe people demanded it. "the people demanded it.we in government had to respond. "that's the way democracy works." holy moses, i was backin high school when you said that. people demanded it, governmentresponds, that's how democracy works. i hadn't noticed that happeningthat much recently. but that's what he said.and that's what was going on. and people not onlydemanded those things,

they demanded greater fairnessin the economy. they demanded that the topsbe knocked off the mountains and the bottom be liftedin the basement. and so every three or four years,the minimum wage got raised. and it got way --i mean, if you look at the votes, you won't believe them. they're like75 to 10, and 82 to 18, and stuff like that. bipartisan all the way.it was just done -- it was done not automaticallybut was done pretty regularly. and at the same time,the tax rate.

do you remember what the tax rate wasunder dwight eisenhower? 92%. 92%. if you talk to people today about it,92% tax rate, they will tell you the economy will cometo a dead standstill, right? the job -- the great job creatorswill not do anything. well, it turns out the growth ratewas better then than now. i'll get to that in a moment. it gets dropped down to 77%under kennedy. ok? the growth rate in that two decadesof the american economy

on average was 3 to 3.1%. ok? ups and downs, valleys and hills,all that kind of stuff, but 3 to 3.1%. fast forward to the growth rate --uh, the tax rate of 35% started by reagan but then perpetuated by bothgeorge w. bush and barack obama. notice that in each instancei've given you both a democrat and a republican.this is not a partisan argument. this has to do withthe philosophy of the period, the prevailing idea of the period:the power of ideas. the growth rate in the 2000s,

including the periodbefore the collapse, was 1 to 1.1%. so you had high taxesand you had a high growth rate. and you had lower tax ratesand you had a lower growth rate. i'm not sayingyou should lower the taxes to get -- to raise the taxesto get a higher growth rate. i'm saying there is no connection. but what was going onwas a narrowing of the inequality of income at the topand the raising at the bottom. ok?

so that was the ideathat was important. and citizens' powerwas enforcing that idea. the exercise of activismby citizens, by people in the moldof trudy sundberg, was affecting the way the governmentoperated in washington, and probably in olympiaand all across the country. ok, so what happened?two things happened. ideas changed and power changed. part of what happenedwith the power situation was that --

let me take ideas first.its simpler. the idea changedfrom stakeholder capitalism to what is now calledshareholder capitalism. an economist who won the nobel prizefrom chicago university named milton freedman wrote a bookcalled "democracy and capitalism" in 1961, in which he saidthe sole mission, the sole responsibility, the sole obligation of the ceois to maximize return to shareholders. ever heard that? yeah, you sure do.you hear it a lot. and it takes about 20 yearsbefore that idea starts to be taught

at harvard business schooland stanford and probably at uw (i don't know that for sure)but certainly the wharton school at university of pennsylvaniaand all across the country, and we get a generationof business leaders who were taughtthat their job is to do that. now, if you have to give somethingto the workers or if you have to give somethingto the banks or one thing or another in order to get there,you make some concessions, but you're no longer balancingeconomic interests. ok?

what happens? what happens is what i callthe rise of wedge economics. there's a wedge driven between the growthof the economy and productivity and the living standardof the middle class in america. from the late 1970suntil about 2012, 2013, the productivity of the americanworkforce rises about 80%. not as good as before,but still pretty damn good. the median hourly payin benefits rises 10%,

and mainly becausemore women went to work. an economist at princeton and an economistat uc california, uh, emmanuel saez at berkeley and -- i'm going to think of the princeton guy's name in a minute, study what happened to incomeover that period of time. alan kruegeris the princeton economist. and what they found wasthat in the period from 1979 to 2013, 84% of the entire growthof the nation's economy

went to the top 1%. 84%. now, when i first heardthe slogan of occupy wall street, the 99% and the 1%, i thought,"that is a very clever political slogan. "it's an exaggeration,it's a bumper sticker slogan, "it looks really great in the numbers,but it can't be that bad." and then i came across this thingfrom alan krueger and emmanuel saez, and if you do the arithmetic,if the top 1% gets 84%, that onlyleaves 16% for the other 99%.

so they're getting five timesas much as the 99% at the top. that's the 99% and the 1%. it turns out that it's nota bumper sticker slogan, it is an accurate representationof what has happened to the american economyover the last three decades. that is profound. that is profound. if 84% of a nation's growthand income is going to 1%of its population, how in god's namecan anyone contend

that that economyis serving most people well? it's an impossible proposition. i mean, i remember studyingjeremy bentham back at oxford as a british philosopher,and he said the job of democracy is the greatest goodfor the greatest number, if you want a quick slogan.something close to that has got to bewhat we're driving for. so, shareholder capitalismdramatically changed the distribution of wealth,and the decisions were being made --

the decisions were being made by the leadershipof american corporations. most people will tell you,and the first explanation i got, and frankly, what i believedbefore i did the research on this book "who stole the american dream?"is, you know, the inequality of incomein america is really the result of globalization, modern technology,the cheap labor in china. you know, there's nothing we can --or now it's vietnam or bangladesh and whatnot --there's nothing we can do about it.

well, there's a certain amountof truth to that, but it's a half truth, because there is this component in which the leadershipof american businesses have been making decisionsagain and again and again to reward themselvesand to hold the living standard and the wages of ordinary workerspretty level. a little bit of growth,but mostly stagnant over a period -- less than 1% growth per yearover a 40-year period. and the cost of healthcare,the cost of higher education,

and the cost of housingare skyrocketing. there's no waya middle class family who's making average incomescan possibly afford to pay its billsover that period. it's not that they can'tmanage their money well. a lot of them can't,and they are to blame. but if you takethe average figures, it's not possiblefor average families to do it unless they start workingtwo and three and four jobs.

so, the change in that ideahad a profound impact on economic inequality,and ultimately, on power inequality. and the second thing that happenedwas a political revolution. only, the thing that's really interestingabout this political revolution is that unlike most revolutions, it occurred from the top downand not from the bottom up. there was a revolutionled by the corporate elite that begins in the 1970s, around the same timeas you get wedge economics appearing.

it is triggered by a guynamed lewis powell who was a famouscorporate attorney who was complaining to his friendsat the us chamber of commerce back in 1971that business was -- free enterprise in americawas in danger, and it was in danger not mainlyfrom soviet communism but from strong trade unions,from the women's movement, from the environmental movement,from the black movement and from the consumer movement.

and his buddiesat the chamber of commerce said, "oh, yeah, that's really smart.you're a lawyer. write a brief." and lewis powell wrotewhat i consider the most importantneglected document in american historyover the last 50 years: the lewis powell memorandumof august 1971. and i thought it was so importantthat i persuaded my publisher to print the text of it in the backof my book so you can see it. and what happened was amazing.

powell's memowas circulated privately. i want to tell you,i was running the washington bureau of the new york times in the late '70swhile this stuff was going on. we had no idea what was happening.we had no idea. we saw the symptoms.we saw the results. we had no ideawhat the cause was. we saw all kinds of political thingshappening that i'll get to in a moment. what was going on waspowell's memo was being circulated to the bossesof these big corporations.

well, within four monthsthe business roundtable had been formed. now, those of you who knowamerican politics know that the business roundtableis the single most powerful voice of blue-chip corporate americain washington today. and you probably thoughtit had existed forever. but it didn't.it was formed in late 1971, about four monthsafter powell's memo was circulated. and then the next thingthat happened was the national associationof manufacturers --

because powell said,"you gotta go fight. "you gotta go fight the labor unionsand the consumer movement "and the women's movementand all this, and that means "you've got to go to washington.you've got to move your offices "to washington.you've got to hire lobbyists. "you gotta put moneyinto political campaigns, "political action committees, pacs."now we call them super pacs. that all got startedin this period right here. ok? it's astonishing.

the national associationof manufacturers moved its headquartersfrom chicago to washington. the us chamber of commercedoubled its staff and tripled its budget. by 1980, before reagan is elected, there are 9,000 registeredcorporate lobbyists in washington. when powell wrote his memo,there were 175 companies that had offices in washington. by the time reagan was elected,there were 2,425. 175 to 2,425.

there were 50,000 people by 1980working for business trade associations. there was an army.i call it powell's army. and what's really interestingand what blew my mind as a guy who had followedthe politics here closely, the watershedin american policy, the shift in american policy, the result of this change in power, the recedingof the citizens' movements, which in some ways had beenso successful, they figured,

"oh, we can just leave itto somebody else to take care of it now. "there's an epa. we don't needto worry about the environment." they said,"women are getting paid better." whatever. 1978 was the pivotal year. it's the year where we startto get deregulation of trucking and airlines and communication. it is the year in whichthe capital gains tax rate -- you probably never thoughtof giving jimmy carter credit for this,

but the capital gains tax rategets dropped from 48% to 28%. single biggest dropin the capital gains rate, which benefits everybodywho is a stockholder, of course. but you need to knowthat the people who studied american income tax returnsover the last decade say the top 1% get 50% of all the tax benefitsfrom capital gains. top 1% againbenefiting enormously. and guess what else?

1978 is the year when they passedthe corporate bankruptcy law reform, which has devastating effectson union benefits in the steel industry and the airline industry and a numberof other industries come the late 1990s. takes quite a while for all thisto play through, but it happens then. and the final thing is 1978 is the yearthat the 401k gets written into law. now the 401k, you need to understand,was never intended as a national retirement system. the 401k was put into law by an upstate new yorkrepublican congressman,

a very good congressmannamed barber conable who i knew quite well. and he did it as a favorfor xerox and kodak, which have their headquartersin his district. it was a tax shelterfor deferred profit-sharing gains for executivesof those companies and about a half a dozennew york banks. would you ever imaginethat anybody who wanted to pass a national retirement program,that they would call it 401k?

no. it's called 401kbecause it's in paragraph 401 of the tax codein subparagraph k. it was designednot to be noticed. ok? but then it got reinterpretedby the reagan treasury department and one thing and anotherand the next thing you know, the mutual fund industrysays, "oh my god," "we could get to managea whole lot of money "that the banks were managingpreviously for companies." it's an enormous profit boom,and it takes off in the '80s.

and guess what? what happens is that 40%of the cost of retirement gets shiftedfrom companies to individuals. individuals paid11% of the retirement prior to the 401kand companies paid 89%. after 401k was passed,individuals paid 51% of the cost of retirementand companies paid 49%, and today the figuresare even more lopsided. so it's a huge shift, hundredsof billions of dollars a year.

so the changein economic policy which begins to exaggerateand accelerate this income inequalityi was talking about before in the private sector, is now acceleratedeven faster because of the changein public policy. public policy matters. then we getthe reagan tax cuts, 1981, which adds a trillion dollarsto the wealth of the top 1%

every decade:a trillion in the '80s, a trillion in the '90s,and a trillion in the 2000s. and then the george w. bushtax cuts add another trillion.$4 trillion. so we have all thaton top of this change in the way the private sector pieis being cut up. so that's how we gotto where we are. then this money starts pouringinto the political system. ok? so we go back to 2006.

you know what dark money is:money we can't trace, money that comesfrom anonymous donors, money that is basically putinto 501(c)(4)s, which were originally set upto be girl scouts, boy scouts, hospitals -- genuinesocial welfare organizations -- but people who were runningpolitical campaigns said, "you know, why don't we set upsomething that sounds like "'americans for prosperity' or'americans for goodness' or whatever, "you know, and we'll contributemoney to political campaigns

"because those organizationsdo not have to disclose their donors." in 2006,there was about $5 million of dark moneyin american politics. in 2012, there was 300 million,302 million. this year it's going way overa half a billion. the super pacs -- super pacs,i can tell you right now, are running about $700 billion -- $700 million, excuse me,of campaign contributions. at this stage in 2012,they were half that.

so, in this campaign, even thoughyou're looking at an election in which it looksas though money doesn't matter because trump is self-â­financed and bernie is raising moneyfrom small donors, the amount of super pac moneyis going right through the roof. and guess where it's going.it's coming into your state. it's going into ohio.it's going into indiana. it's going into illinois. it's goinginto the control of the us senate. it's going into the controlof the congress. ok?

so we've got that moneygoing in there and then you havesomething else going on that's really interestingand important -- less of a problemin washington state than in other states, but stilla bit of a problem here -- and that's gerrymandering. we all learned about gerrymanderingin high school and in college. gerrymandering todayis a massive industry that is operated by reallysophisticated computer software

so that the strategistsof each side -- both democratsand republicans do it. this is a totally nonpartisanmonopoly. this is a duopoly.remember? a classic duopoly. democrats, republicans,make sure nobody -- everybody says,"can we have a third party?" not a chance as long as we havethis kind of gerrymandering going on. it's dead. there's no wayyou can do it. today -- listen to this --

85 to 90% of all the congressional districtsin the country are so gerrymanderedthat right now, if i took the time,i could tell you which party was going to winthe general election six months in advanceof the general election. and a really good political reporterfor charlie cook's report or whatever, he could've told you a year agobecause of gerrymandering. now think about the distortionof democracy here.

i have to go backto my basic civics. if you rememberwhen the founding fathers set up the elections, they said you really can't trustthe people to elect a president. you can't have a popular vote. you've got to set upthis awkward thing called an electoral collegeto kind of filter it and just sort of be --we don't trust democracy quite that much,so let's put something in between.

and the second thing they saidwasâ­â­, "and the senators, "they're going to be in officefor six months. "we can't have direct electionof senators." remember that? we didn't get direct electionof senators till 1916, one of those amendmentsthat got passed under woodrow wilson along with the women's vote, right? "but the one thing we will do iswe'll set up a house of representatives "where there are electionsevery two years "and we'll let the peoplevote directly.

"we'll call it the people's house." do you remember --everyone remember that phrase in your college political scienceor government or civics classes? the people's house. so at the momentwe have a people's house in which we're supposed tohave competition so the people can render a verdicton the government's actions and policies of the last two years. and we now have 90% of itset up as monopolies

to prevent the people from beingable to make that choice. if you remember not recently, several times we've hadthe government shut down. you look at the nationalopinion polls and the people are againstshutting down the government. but if you go to the districtsof the 40 representatives who are really running that,in their district, only about 7 or 8% votedin the party primaries, and they really would like to seethe government shut down.

so what the public wantsas a whole is being distorted by a system that's protecting the same group of peoplewho overthrew john boehner, who now pose a threatto paul ryan, and who will pose a threatto the next president, whichever partyhe or she comes from. so we have some fundamentalproblems here, ladies and gentlemen. these are problems that --god, i wish trudy were here. she'd be up here, by god, she'd begoing in 90 different directions.

she'd have us all moving.that's what we need now. part of our problemin america today is we've lost faith in people power. i have a friend in texasnamed ernie cortes. he's one of the great organizersin the southwest. he organizes --as you might guess from his name, he organizes hispanic votersin texas, arizona, new mexico,southern california.

he said, "rick," he said, "there's thatfamous saying by lord acton: "power corrupts. absolute powercorrupts absolutely." but he said, "you know what? "powerlessness also corrupts." powerlessness corruptsdemocracy at the core. if we, if people like you and me,people in this room, if we believewe don't have the power to change our country today,it's over.

we've got to go backto believing in ourselves. we've got to go back to beingâ­â­ --how many of there are you? 300 here? 250? --250 trudy sundbergs. i'm serious. and i'm saying this to audiencesall over this country. every time we talkabout politics, if we say, "they've gotta fix it,"it just flew out the window. they are not going to fix it. they actually like it the way it is. they're in office and they'regetting the policies they want,

which is the status quo,which is highly unequal -- highly unequal in terms of income,highly unequal in terms of power. that's why trump'snear nomination is so upsettingto the republican elite. it's upsettingfor lots of other reasons too. let me be honest about it.[laughter] but there is a tendencyto say all the negative things about him without recognizingthat he is actually speaking for a whole lotof dispossessed millions

who feel as though their voicehas been shoved aside by their own party,and they are fed up with it. and there's no questionabout bernie and what he's saying. he's saying we've gota rigged system economically. we've got a rigged systempolitically. we've got wall streethaving too much money. ok. so i'm back to it. ladies and gentlemen,it is up to us. it is up to us in this room.

it is up to usin this room tonight to decide we have to dosomething about it. now, people will then say to me --actually i spoke this morning at oak harbor high schooland a bunch of kids came up to me afterwards --i was so happy -- and they said,"what can we do?" do you know about i-1464? does anybody in this roomknow about i-1464? i-1464 is a proposal

that is now being circulatedin washington state. it needs 300 signatures to beput on the ballot this november. and i didn't come hereto advocate for this. i came here to tell youthis is an example of somethingyou could decide to do, ok? it calls for average voters to gettwo or three $50 vouchers so they can give the moneyto the candidate of their choice and reduce the power of megadonors. it says that contractorsand lobbyists cannot give

more than $100to any politician who, once they're in office,the lobbyist or the corporation is going to do businesswith them. ok? it says that any campaign donationover a certain amount -- i think it's $5,000 --from any group that spends $5,000 on electioneering communicationsmust disclose the original donors. it's not satisfactoryfor super pac a to say "we got our moneyfrom super pac b" when really they got itfrom jim jones

and sylvia johnson,and so on and so forth. we want to know the jim jonesesand the sylvia johnsons. ok? so it's got several provisionslike that. then there's i-735.do you know there's i-735? do you know what i-735 is?yes, this lady does. i-735 is a proposalalready on the ballot, already got more than330,000 signatures, that says washington statevoters this fall either will or will notgo on record as saying

we need an amendment to theus constitution to roll back citizens unitedand restore the power of -- â­â­[applause] but my point, ladies and --this is going on all over the country. this actually is a very excitingtime of opportunity. this is -- do you know,â­â­i follow this. i have a website calledreclaimtheamericandream.org. what we do is we try to trackreform going on all over this country. the best gerrymander reformin this country

over the last 10 yearshas happened in florida, and the second besthas happened in arizona. now, did you figure floridaand arizona were gonna be out front? do you know what's going onin south dakota this year? south dakota? south dakota has three reforms. they've got a nonpartisan primarylike the washington state top two. that's on there. they've gotgerrymander reform with an independentredistricting committee

and they have the same kind of billas i-1464 here in washington. this isâ­â­ -- you knowâ­â­,it may or may not pass. the gerrymander reform in floridatook five tries before it passed. but the point is, people in americaare starting to say, "we're fed up, "and we've got to do it." ladies and gentlemen,it is up to us. please. please don't let thisjust be a talk. please honor...please honor trudyby actually getting engaged. marshall goldberg is out there.he is dying to get you moving.

please do it. thank you very much. all right. this is too smart an audiencefor everybody to have agreed with what i said, so -- -- so have at it. let's discuss. another one of the thingswe need to rediscover in america is a way to meet togetherin the village square where we can disagreewithout being disagreeable. we've kind of lost that ability.

yes, sir. please, go ahead. (male audience member)i don't know if it's on. it is on. i agree with you completely.i'm not here to disagree with you at all. i notice that i'm being manipulated, and i'm being manipulatedby the news media, for example. i guess they're probably ownedby disney or ge or whoever they're owned by. but i noticed on cbs news,the top story was about some guy that killed two other peoplewith a gun in washington, dc today

and tracking downthe perpetrator of that. and that -- those eventsover and over again are taking the top spotin our national news media over and over again, when -- how can an electorateunderstand about economics or geopoliticsor anything like that if all we're hearing aboutis mass shootings? this is not -- this is not stuffthat we need to know about. (hedrick smith)you're right.

(male audience member)and then there's another thing that occurredthat didn't get reported on, and that is, there's a guywho flew his airplane onto the lawn of congress,which is illegal, by the way. and in it he had a letterfrom each one of the 50 states talking about -- in favorof campaign finance reform. and the media reported on him violating the congressional airspace,but not on what he was carrying. (hedrick smith)oh, no. that's not true.

i think your general chargeabout the media is fair, ok? but let me take the last thing.i don't think that's true. that story was pretty well reportedon both sides. but are you right in sayingthat the media is not giving a good job -- not doing a good job coveringthe most important stories? yes. no question about it. i wrote a book called"who stole the american dream?" and along with other journalists,

for 30 years i missed the mostimportant story in america, which is the growth of inequalityof income and power. we didn't cover that story.we covered this factory closing or that factory closingor this strike that failed or these jobs that went overseas,but we never put it together. and part of what's happenedin the media today is that -- two or three thingshave happened. number one, one of the thingsyou said is absolutely right on: the main television networksare now owned by corporations

which insistthat the news department be a profit center. when bill paleyowned and ran cbs news, edward r. murrowand eric sevareid and all those guys, charles collingwoodand the rest of them, were out doingdeep investigative reporting about migrant farm workersand about -- you name it, because paley was willingto accept a loss. this was their serviceto american democracy.

we can demand that back.we can demand that the fcc -- we as a people -- you're right,it's happened and it's wrong. but we can start demandingthat the fcc, when it renewsthe broadcast licenses, both for networksand for stations, that they have tocommit themselves to certain basic standardsof coverage. we got rid of the fairness doctrineâ­â­in 1987. under the fairness doctrine,if you had a talk radio show host --

and i won't nameanybody in particular but your minds will quicklygravitate towards some -- and they were takinga particular side, the obligation wasthat you had to have the other sidehave an equal amount of time. getting rid of the fairness doctrinewas a big change that contributes to the trendsthat i was just talking about tonight. so that's true.the second thing that's happened is the industry is justgoing through perilous cuts

in income,and that means cuts in staff. to do the kind of reportingi'm talking about tonight, to do the kind of reportingthat's gonna put together the picture that you ought to haveand that we ought to be delivering takes time, takes money,takes skilled people. and what's going -- what have you --what's happened in seattle? you've got one paper nowinstead of two. all right? the pi staffis going on the air to try to put togethera regional report

and try to fill insome of the blanks. people are working on this.we may have to decide that news is a public utilityin order to get the kind of reportingthat you're talking about or to get the kind of timely analysisthat you're talking about to voters and to peopleall across the country all the time. there may have to be somecoming together of universities, of public television stations,of libraries, of that whole nonprofit sector.if you go to europe,

they're not -- they think of --they think of power and they think of the waythat society operates as sitting on a three-â­legged stool: the public sector, the private sector,and the nonprofit sector. and all of those play an important role.we haven't thought that out. i mean, there are a whole bunchof things we need to think about. i'm completely with you in termsof your critique of the media. absolutely. what leads bleeds. why?because they want eyeballs. why do they want eyeballs?they want advertising.

why do they want advertising?they want ratings. why do they want ratings?they want income. why do they want income?the boss has said you gotta have income. so we gotta changethat dynamic. and part of it is -- let's all admitsome responsibility here -- a lot of people want to watchthat titillating stuff. i mean, all that stuff about trumpand the outrageous things that he's said, the media is partly responsiblefor having created trump. ok?

but youâ­â­ -- but you better believethe audience really loved it. when he's talking --he's confronting a television anchor and suggesting her tough questionsare related to her menstrual cycle? i mean, that's outrageous.that's outrageous. but people wereso titillated by that. my god, they played itand overplayed it. "what did he mean?and did he really mean it? "what'd she say?what'd they think of it? "and is fox gonna fire her?are they gonna promote her?"

i mean, it's wacko. and part of it is the public's ownhunger for bread and circuses, to go back to ancient rome.so i'm with you. i think we need to sit down.i think we need to have talks between citizens and the peoplewho are running the media. it's well worth taking the timeto take a delegation from whidbey down to king and, you know,the others down there, kiro and so forthdown in seattle and say something aboutwhat you just said to me.

i mean, i think this is somethingwe need to fight for. yes, ma'am. oops, sorry.she's got the mic. (female audience member)i'll pass this right down to you. (hedrick smith)i didn't see you. sorry. (female audience member)i just wanted to ask you if you would say a few wordsabout milton friedman, because he just --he seems to be like deep throat, you know?he's way back -- (hedrick smith)oh, no. deep throat was secret.

milton friedmanwas right out in front. (female audience member)but i'd love to have your perspective on it. (hedrick smith)well, milton friedman -- i mean, milton friedmansaid a number of things. milton friedman is a famous economistand he won the nobel prize for his analysisof the way markets work. and most economists, includingeconomists well to the left of him, like paul krugmanand joe stiglitz,

will respect the economic --or the econometric work that friedman did. but friedmanwent way beyond that and he becamean economic philosopher, in which he was sayingwhat people ought to do, not what the market was doing.there's a difference. we in the mediahave that problem now. we're no longer content to reportwith what happened and analyzing it. we want to tell youwhat's going to happen next. beware of reporters,along with everybody else,

who's telling youabout the future, ok? so, what friedman did washe sanctified this doctrine of the role and the functionof the corporation and the ceo. and then one of his disciples,a guy named mike jensen, who became an associate professorat harvard business school, took friedman's idea one step furtherand said, "you know, "if you really want ceos "to deliver maximum returnto shareholders, you need to make themshareholders.

so instead of paying them in money,pay them in shares. and we're not talking aboutpaying them in 50 shares, 5,000 shares. sometimes they get paida million shares. the champion of allwas larry ellison of oracle. in the late 1990s, he got paid $700 million in oracle stockone year. amazing amount of money, ok? and actually jensen saw --

what happened was, ceos gotvery good at playing this game, and they could jack upthe price of the stock, cash in, get out,the stock might go down. they are not likeordinary stockholders. in the first place, they've gotall kinds of inside information. in the second place,if the stock doesn't go up, they go back to the boardand they say, "i really got screwed." "and you really need togive me new shares "because the stockhas gone down."

now, the deal was,the shares was at 40 and they were supposed to geta bonus if it went to 45, but instead it went down to 35,so now they want new shares at 35 and they want to throw awaythe old shares. and then what started to happenin america was, companies started tobackdate shares. they started to fiddle aroundwith shares. there was a study doneby harvard economists and a bunch of other people,and they found

that at 800 major companies, the boards of directorshad altered -- it's not clear to mewhy this is not a crime. this is fraud, right?they altered the dates of when the shares were issued so that inevitably the ceosgot paid more money. it was crooked, ok? apple. steve jobs. apple did it over 4,000 times.

they altered the datesof their shares. total dishonesty. that's also in my book. but what's astonishing to meis the total corruption of what was intended to bean intelligent incentive system. and can you blame friedmanfor all that? yes and no. i mean, he came upwith the basic idea, but other people, you know,then played it to the hilt. but he playeda very important role,

and because of his august statureas a thinker, he began to be taughtin the business schools, and then he began to be translated,and then jensen came along and added the other --and he had a tremendous impact in this idea shiftthat i was talking about, and that's very, very important. and we need an idea shift, not backbut forward to another, better idea in which we share the wealth better.maybe somebody over here. (female audience member)yeah, i have the mic.

(hedrick smith)oh, you've got the mic? then you're it. (female audience member)we have the internet and we can communicatewith a click, and we are not doing that. we're not using facebook.we're not usingâ­â­ -- we're not creating flash mobs. we need you.you are our august thinker. and we need youto give us three demands so we can stay on message.

and we need to storm the media, we need to stormthe legislatures, and we need to becomepart of public pressure and they cannot ignore us. because this has gone onway too long. so in your book,which i intend to buy -- (hedrick smith)my children thank you. (female audience member)are there three demands -- (hedrick smith)oh, god.

(female audience member)just three. (hedrick smith)my wife should get up at this point. it's a very funny moment. i write this book, ok?and i'm writing this book with the analysisthat you heard tonight, ok? i get to the end of it and i send it into my editor at random house. her name is kate medina.and she says, "rick, "this is a hell of a job,but you've left us in the ditch. "you have absolutely got to tell ushow to get out of the ditch."

like you. she didn't say three,but she said get us out of the ditch. and i said, "kate, i'm a reporter, "and my job as a reporteris to call balls and strikes, "foul and fair,tell the story the way it is, "let the chips fallwhere they may. "there are think tanksin washington, "there are parties, the white house,council of economic advisors, "everybody -- it's their job." she comes back to meand she says, "rick, that's no good.

"you've actually got to tell uswhat to do." and i'm about to say no,when this lady over here -- would you stand up again?could you stand up? susan says to me,"rick, kate's right. "you gotta do it." i did it. the last twoâ­â­ chaptersof my book are hedrick smith's handy dandy10-step plan to save america. [laughter, applause] now, i'm really glad you laugh,because i felt awkward doing it.

but i'm not a genius,i'm a reporter. and so i went and i gotwhat i thought were intelligent ideas that other people had,and i started to put them down. and eight of them are in economicsand two of them are in politics, and the most important onein politics is what you said a moment ago. folks, we can't letanybody else do it. we have to decideto do it ourselves. so to that end,after i published the book,

i launched a website,which is called -- and i hope you allwill go there, not just becauseit will boost my ego, and it'll do thatand that'll be nice too, but the real reason is,it's out there to serve people: reclaimtheamericandream.org. and what we've taken a look atis amending the constitution, public funding of campaigns,exposing dark money, gerrymander reform,minimum wage,

student debt,more inclusive capitalism. on each issue,there's an issue brief and there is a progress reportthat you will not believe, because it tells youwhat is going on in almost every state of the unionif anything is going on. you will not believehow much is going on. the media is not beginningto report it, back to your question. that's why i'm doing it. ok? and then there's a success story,and do you want to know

what one of the success stories ison minimum wage? it is the story of seatac's fightfor the $15 minimum wage. and you're gonna read some things --i went out to seatac and i actually talked to some ofthe muslim preachers out there, people from ethiopia,people from somalia, people that i'm not surethat even the seattle newspapers got around to talk to. and those are the kinds of storiesyou're gonna find there. it's there. it's there for you.get young people to go there.

i don't have any stake in it. i'm not making a penny of moneyout of it personally. i believe -- i think you can tellat this point, i believe pretty passionatelyin what i'm saying, and i'm doing everything i can.the ten steps are in the book. the reclaimtheamericandream.orgis out there. i-1464, which i told you about,i-735 -- they're in your state. and if you've got friends in oregon,go say, "my god, "oregon is a progressive state,where the hell are you?

"we've got a top two primary,why don't you? "we've tried to fixgerrymander reform." washington state hasa partial gerrymander reform fix. it could do better,but it's better than a lot of states. where the hell's oregon? and then about idaho?come on, we can do stuff. the pacific northwest --do you realize what you have in this region? you have initiative referendumand recall.

citizens can take action. to try to get actionin old states like pennsylvania and illinoisthat were formed before the western statesbecame part of the union, they don't havethat populist method for changingtheir state constitutions. it's much harder.you guys have gotta lead the way. we guys have gottalead the way. ok? how about over here.?

(male audience member)mr. smith, up here in the back. my name is nicholas petrich.i read your book "the russians" back in the late '80swhen i was an interrogator in the us armystudying russian at dli. (hedrick smith)i hope it helped. (nicholas petrich)don't ask me to quote, it was a long time ago. i'm also a senate candidatein the 10th ld for washington state,and that's, like, the first layer

of what i'm trying to doto bring change. but i'm glad this young ladybrought up the internet. i also teach a seminarcalled cryptoparty. (hedrick smith)crypto what? (nicholas petrich)cryptoparty. you can look it up. you can google it.it's called cryptoparty. it's done all the over the world. it's how to protect yourself,or ourselves, from mass surveillance,whether it's government,

hackers, foreign governments,or foreign agents. and i'm bringing that upbecause of what you did for daniel ellsbergwith the pentagon papers, and i would like to knowwhat your opinion is of edward snowden and julian assange,who i consider heroes, not just for the united states,but for the whole world. and, um, i don't --with all due respect,â­ the paper you worked for

is no longer the paperthat it is today. the gray lady has -- (hedrick smith)in some places -- in some areas it's better. (nicholas petrich)well, my feeling is that when it comesto national security and informing usabout what's going on with our own government,they're falling way short. (hedrick smith)ok, the only reason you know the nsa is eavesdropping is the new york timesbroke the story.

(nicholas petrich)are you sure about that? because i heard about it from a guynamed jacob appelbaum who was a computer science activistout here at university of washington. (hedrick smith)nope. no, no, no, no, no. in terms of mass communication,the new york times broke that story. but you were askinganother question, and i'll start to answer itif you hand the mic back to somebody else,'cause i have a feeling as a candidate, you might liketo hang onto the mic.

now in terms of edward snowden,what i'd like to share with you -- and i didn't realizei was gonna bring it up tonight -- six years before snowden, i did a documentaryfor frontline called "spyingon the home front," which for the first time exposed that the nsa was wiretappinginto email traffic in the san francisco,california region. the problem we had was,we did not -- unlike snowden,

we didn't haveany government documents. we had a whole bunch ofcircumstantial evidence in which we put it together,we laid it out there. so i think you can tellthat i would say that if a guy namededward snowden exposed what the nsawas doing to our privacy, and the congresssubsequently decided that it had to amend our lawsto constrain the nsa more, you've already got your answer.

i mean, if --how can you say that that informationwas useful to the congress to decide to protect us --no, you've had a shot. let me get other people, ok? we can spend the restof the evening, the two of us, and not give anybody elsea chance, and that's not right. but snowden, i think, is a hero in the sense that he tookthe personal risk. and i think part ofwhat happened there

was that snowdenlost some credibility because he didn't standwith the risk that he took. when we did the pentagon papers --i will tell you, when we did the pentagon papers,we had no idea what the governmentwas going to do with us. all of us were committedto doing it and were ready to go to jail. the last ten days before weprinted the pentagon papers, the new york timesmoved neil sheehan and me.

we had been working in a hotelin downtown new york for three monthswith all this top-secret information. they moved usinto the new york times and we physically livedin the new york times for the last ten daysbecause they figured it would be harderfor the fbi to come arrest us if we were physicallyin the building. the publisherof the new york times was told bythe new york times general --

was told by the new york timesoutside attorney that this was a violationof the constitution, that we would be chargedwith treason, the paper would be shut down, and he was taking a riskwith the property. the new york timesfired that law firm and got floyd abrams,who defended the new york times under the first amendment. ok? so we didn't knowthe outcome of that,

but we were prepared to do thatbecause -- because of two things: number one, we were committedto telling the public what had gone on, and it wasjust terrible what had gone on. we had a successionof administrations from both partiesover a period of 20 years that had lied repeatedlyto the american people about the nature of the warand the nation's commitment to the war and what the publicâ­â­ --what the government had said to other governmentsand what it was doing. ok?

and the second thing waswe were extremely careful. unlike wikileaks,we were extremely careful that we did not exposeanything that was live. there was a diplomatic portionof the pentagon papers which dealt withongoing diplomacy, which was trying to reacha secret peace deal through burma,through various other countries, certainly through franceand others. we had no idea which of these leadswere live and which weren't.

and we made a collective decisionat the new york times that we were notgoing to expose something that could actually jeopardizenational security. our judgment was, on what theeisenhower administration did, what the johnson administration did,what the kennedy administration did was all history,and there was no way that could actually jeopardizenational security even though it was a hugeembarrassment to the politicians. so i think --dealing with this kind of stuff --

and i ran the washington bureaufor a while and i made a numberof decisions myself about what we should printand what we shouldn't print. you wantâ­â­ somebodymaking those judgments with the same kindof sensitivity, commitment to integrity, as the doctor you would talk toif you've got a serious case of cancer. you want peopleof really good judgment. you're not looking for sensation.

you are looking to pressthe limits of freedom of the press to the absolute limit. but you are acknowledging --i was in vietnam. we never printed anything we knewabout unfolding battles where it could jeopardizethe lives of american soldiers. there were certain restraintsthat we imposed on ourselves because of our own senseof national security, but then we didn't let anybodytalk us out of it. the federal government went

to the executive editorof the new york times when they were about to printthe stories about the nsa eavesdropping, and they repeatedly tried to getthe new york times not to print them. and the new york timesdid delay for several months while they argued this out. and in the endthe new york times said, "we don't believe that's going tojeopardize national security and we went ahead.this is a totally separate subject.

it's a fascinating one.it's an important one. and our privacy is under assault. i'm with you on that.good luck to you. yes, anybody else? (male audience emember)so, earlier on in the talk you were mentioning, um, different protests,ways that people had come out and, like,made themselves visible, and some of that included nonviolentcivil disobedience, the freedom rides.

(hedrick smith)certainly, yeah, certainly. (male audience member)and i guess that resonates with me 'cause i'm part of a groupthat'll be going up to anacortes on may 14 and 15 to face downthe march's point refinery in a mass -- as part ofa mass worldwide act of civil disobedience to try to breakoff of fossil fuels, and a questionwe kind of had was, what is the role of civil disobedience

and kind of reaching,touching hearts and minds, um, making things visible,creating change? what maybe are some examplesof civil disobedience that you've seenthat you thought maybe had -- (hedrick smith)my most immediate example of them, you know, are the police dogsin birmingham and the fire hosesand the bullwhips and the billy clubsthat were being used on young peoplewho were down in birmingham

marching in the streets, um,asking for lunch counters at which both blacksand whites could sit, drinking fountains which could beused by both blacks and whites, job opportunities for blacksin the grocery stores and the supermarketsand the department stores there. and those imagescaptured on national television turned public opinion aroundgradually. it's very interesting. martin luther kingwrote a famous letter,

the letter from the birmingham jail(maybe you've heard the phrase) when he was arrested. and peopleâ­ -- a lot of peoplewho've heard about that letter and haven't read it, um, think that it was a letterthat attacked segregation. it did that, of course, but that'snot who it was written for. it was writtenfor the people in the middle, in alabama, in birmingham, who really were privately criticalof jim crow, of discrimination,

but were sitting on the fence,not acting. and what he said:"what you are doing "is you're reinforcing jim crow,and you have to get off the fence." that is whatcivil disobedience does. what it does isit forces people to say, "is this an issueon which we think "there is something --there's a higher law, "there's a higher moral,there's a higher ethic -- "or even within the laws,there's a higher law --

"than the one that is beingacted on or ignored?" so you're raisinga fundamental question for citizenry in a democracyto make judgments -- that democracy, "demos,"the greek word, means "people" -- that the people have to decide. we have to get back to that. and the great thingabout this campaign is it's the first one i've seenin a long time where it's this senseof an authentic connection

between millions of peopleand a candidate who is saying to you, saying to us,"we have the right to do this. "we should do this.what's being done is wrong, "and we need to act on that." so without making any judgmentabout your particular cause, although i couldand it wouldn't be hard, i think that that actdone thoughtfully, done strategically, not just tackily,but done thoughtfully. and make sure that you're reallyraising a fundamental question.

then it has an appropriate place. but you have to be preparedto pay the price. i mean, the thing that king wasprepared to do was to be arrested. i started to say about snowdento the earlier questioner, who i gather has leftnow that he's made his talk, um, was that... was that snowdenwould have had much more power in this country if he'd stayed hereand been arrested. but by leaving, he undercutsome of his own credibility.

he deserves credit for what he did,i think, but he undercut it. so i think it's very important,if you're gonna engage in civil disobedience, to say,"i'm being deliberately disobedient. "i believe the law is wrong.the law needs to change. "i need to bring thatto your attention this way." that's what i learnedfrom the people i followed. yes, ma'am. if you can belt it outwithout the mic... (female audience member)i'm concerned about -- you mentioned about the income inequality,but what i'm really concerned about

is the educationof the american people. i think that's why we havea lackadaisical group of people in this countrythat don't do anything. they're not awareof who the vice president is. they don't know anythingabout our government. (hedrick smith)do youâ­ -- where you do live? (female audience member)here, in whidbey island. (hedrick smith)what town? (female audience member)langley.

(hedrick smith)ok, i want to tell you, i was at oak harborhigh school today. i would not have saidi was terribly impressed with the level of knowledgeof american government at oak harbor high schoolas a result of my interchangewith those students. so, um... and then when i talkedafterwards to one of the teachers, they said,"we don't teach civics anymore." [audience murmurs]

(female audience member)we have the sort of people that, if they know the facts,i think they would become active, but we don't have newsthat reports properly. and kids use the internet,which sometimes is, you know, good and sometimes not so good. but we don't have enough informationfor our younger people. most of us here are olderor involved because we have time. the younger people are workingtwo jobs and trying to survive. but i think if the people knewwhat was going on,

i think they would be more active.how do we get that message? (hedrick smith)well, i certainly think people could usea lot more information, but i would have said thatâ­, um... i would have said that both theresponses to public opinion polls and the action of votersin this year's election show that at least 20 million peopleare thinking about what's going on, and there are gonna be morein the time ahead. i mean, there's always --there's always a lack.

and could we do betterin our schools? absolutely. i would love to seean america in which, after the kids saythe pledge of allegiance, at every grade,they spend the next five minutes talking about somethingabout american politics, either they learn the nameof the president or the vice president or the senator or whatever. and thenas you get older, learn more. you can't teachâ­ --part of the problem is we've sort of cornered thatand said, "we're gonna teach that

"in civics," you know,"and get it out of the way, "and you've gotta do that over hereto the social studies teacher," who's then gotta become a geniusat sort of energizing and intriguing and enchantingthe younger generation. that's not how other nations do it.you do it -- you learn it on the way. so, how about the pledgeof allegiance, five minutes, -- pledge plus five, you know,or something like that. ok. yeah, over here. i'm sorry,i didn't see you. it's a little hard. (female audience member)that's ok. hi, my name's anna.

i want to comment on whatthat beautiful lady said right there. i thinkâ­ -- if you don't mind,i think one of the things -- i have a 15-- almost 15-year-old sonand a 12-year-old daughter, and my son comes home,he's a freshmen in high school at kamiak, and he says, "mom, no one will let ustalk about anything else "besides what they believe." and i think in their homesand in our school system, it's so divisive. and you see on the internet,we can't have a conversation

about anything just slightly differentwith a different perspective. so if you live in washingtonversus you live in utah, you're gettinga whole different perspective 'cause you're not allowed to speak up,especially as a 15-year-old boy. and as a mom, i don't understand.i said, "i can't fix it all," right? "i can't fix it all." so i thinkpart of the problem is we're so divisiveand we won't connect, but that's -- i just wanted to say that.but my comment -- (hedrick smith)i want to -- can i take a shot at that?

and then you can geta second shot. ok. i've run into this problem -- (anna)i'm not running for any office. (anna)not yet. (hedrick smith)i've run into this problem almost everywhere,and i finally ran into some people who had an answerfor what you just said. i was in tallahassee, florida. i was invited there by a groupcalled to the village square.

to the village square. and it's a group that got organizedafter jeb bush's administration, which is obviouslyfilled with republicans, in the state of florida, in the county of leon county, which is a heavilydemocratic county 'cause it's got a lot ofstate workers and it's got a lot of faculty and studentsfrom florida state university. and they foundthey couldn't talk to each other

rationallywithout going off the deep end, uh, and shouting at each other about highways, schools,health, vaccinations, you name it. and so they set upthe village square as a place where peoplecould come together and talk to each otherand disagree. they knew they were gonna disagree.this was not kumbaya. but they agreed to do itwithout being disagreeable, and they agreedto meet every month

and pick up a different issueevery month. and i was invited to come thereto talk about economic inequality. and in the main --and they have dinner, they break bread together,so they're sitting down, they're eating, which is a good idea,brings people together. didn't have too manyglasses of wine, and they weren't carryingconcealed weapons, as far as i know. and in the table, the head table,right directly in front of me, were two former membersof jeb bush's cabinet

and two democratic countycommissioners from leon county. and they have now been doing thatfor three years. it has now spreadto every major city in florida. it has moved to oklahoma city,it is in sacramento, california, and it could be right herein langley if you wanted to do it. i mean, i think -- you know,we're back to talking about what do we do about the media?well, we go talk to those people. what do we doabout talking together? you're raisingreally important questions.

there are thingsthat you can do. and we can no longer stopand say we're helpless. let's sit down and dope it out.i will bet you, if marshall goldberg comes out againand kicks me off the stage, that he will sayat some point, you know, "i'd like to dothis village square thing" or something like --you don't have to call it that. you can call it whatever you want.but building and creating forums where peoplecan come together and talk

without shouting at each other, without becomingpolemicized and polarized, and actually commit themselvesto try to solve problems is the way to reknitour democracy, and it's got to be reknitfrom the bottom up. (anna)so, my question -- (hedrick smith)you had a second shot. (anna)i actually did have a question. i have so much to say about that.um, but iâ­ -- there's gonna be

a lot of things writtenabout this political season, and i'm curious to know --i mean, i'm sure you could write15 books on it, but why right now?why is the escalation happening that both establishmentsare being taken down, that both of themare under attack, um, and why is itcoming up now? and i'm talking about the democratsand the republicans, both of them. (hedrick smith)well, um, let me be really honest:

i don't know. ok? i don't know. but i've got some hunchesthat i'll share with you. ok? in the first place, it's been going on for about 30 years,as i was suggesting to you. often, problems have tofester that long before enough peopleget exercise where they beginto band together and people likethis young man up here are ready to docivil disobedience.

and it's often it takes that long before some political candidateswill start to say, "gee, "i feel that way, and maybethere's an audience out there." so there is something aboutthe fullness of the time thereof. but if you look at the rhythmsof american history, there's something therethat may give you the answer. if you go back to the 1880sand the 1890s, we think of that eraas the era of the robber barons, the railroad barons, right?john d. rockefeller.

enormous inequality of wealth.people call it the gilded age. it's the first ageof hyperâ­concentration of wealth in america,in american history. and it also was accompaniedâ­(and most people don't know this) by an economic phenomenoncalled the long depression. it built up over a periodof about 20 years in the last partof the 19th century, and what do you seeat the beginning of the 20th century? you begin to see a movefor political reform.

the women's suffragette movementstart saying women want the vote. people start saying,"wait a second, "the railroad baronsare picking our senators. "we don't want the legislatureto pick our senators," because the railroads are goingto the legislatures, literally, in kansasand illinois and ohio and all across where the railroadswere running, and they were literallypicking the senators. mark hannawas the big money guy

in ohio politics, you know, who helped mckinleyget elected and so forth. there's a reaction to it,and you begin to see the rise of the progressive era,and then teddy wilsonâ­ -- teddy rooseveltstarts busting the trusts. you probably don't know it,but the first law passed in america banning corporate contributionsin campaigns was passed in 1907. so you see this long periodof inequality,

this depletionof the economic growth, and the reaction against it. and then you go to the 1920sand you see this second great wave of hyperâ­concentrationof wealth in the country, and lo and behold, you get --before the new deal you get the epic movementin californiaí¾ you get huey long talking aboutsharing the wealth in louisianaí¾ you get grassroots movementsaround the countryí¾ you get the rise of the new deal.

here we are nowin the third great wave of concentration of wealthin american history, and you're starting to seethe counteraction. so there is a rhythm to history. why this electionand not last election and not the one before? it's often the circumstances. an incumbent president is thereto defend a record that's already there. some people thoughtit was gonna come in 2008,

and we can talk about thaton another evening, but part of it isthe rhythm of history. there is a time --i don't think we're done with this. i think when this election's over,no matter who gets elected president, we're gonna have to deal with thatgridlocked government in washington, unless one party controlsall three centers of power: the white house,the house, and the senate. we might thenget some things done. but if it doesn't get done,this is gonnacome back.

what's wrong in this countryis deeply wrong, it is structurally wrong,and there are too many people who are too unhappyto let it go on, and we're not a passive people,thank god. thank you very much. (paul pitkin)hedrick smith, everyone. hedrick smith.

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