As reported again by the OECD (Organization for Economic Co-operation and Development) the gap between rich and poor has grown in more than three-quarters of OECD countries over the past two decades. A finding that has been disputed by the Bush government over the last eight years.
The OECD found that the economic growth of recent decades has benefitted the rich more than the poor. In some countries, such as
A key driver of income inequality has been the number of low-skilled and poorly educated who are out of work. More people living alone or in single-parent households has also contributed.
In developed countries, governments have been taxing more and spending more on social benefits to offset the trend towards more inequality. Without this spending, the report says, the rise in inequality would have been even more rapid. However, John McCain and other Republicans have been disputing such finding. They believe that lower taxes and less government spending on social benefits will help the economy and eventually lead to more equality. Who should we trust more, a government whose interest lies with the wealthiest or a study of a well known organization?
As one of the key solutions to this inequality, the OECD named better education. Better education is also a powerful way to achieve growth which benefits all, not just the elites! This principles are shared not only by many others who are concerned with this inequality but also by Barack Obama.
ZAKARIA: We're back with Queen Rania of Jordan.
In a broader sense, looking at the Middle East, do you think that the forces of moderation are winning? Do you think that, if you will, between the Dubai model and the al Qaeda world model, Dubai is winning?
QUEEN RANIA: I wouldn't say that -- I wish I could say that conclusively.
I think a lot depends on the political process. I think if we can deliver on peace, and if we can -- I think it depends on two things: the political process, such as delivering on peace, and I think it depends on the government's abilities to look just -- look beyond just the economic gains. I think a lot of investment needs to be done in the human capital in the Arab world, in changing the social landscape. We shouldn't just be looking at investment in education expansion, for example. We need to reform our education system, you know, make sure that we have the right curricula for our young people, make sure that we invest in labor-intensive areas so that we can provide jobs.
You know, one in four young people in the Arab world does not -- is unemployed. We're talking about 70 million young people in the Arab world. One in five live below the poverty line. So, in the Arab world we need to create five million jobs every year, just to prevent a rise in unemployment.
So, that kind of vision is necessary.
ZAKARIA: Do you feel as though those kinds of forces that are trying to work to a more modern interpretation of Islam are willing to condemn the more backward forces?
There's a lot of people who feel that, in the world of Islam, the moderates are too scared. They don't speak out. They're, you know ...
QUEEN RANIA: Moderates generally can be a little complacent, whether it's in the Arab world or elsewhere. That's why you find that the extremists are always the ones with the loudest voices.
And what I would -- and I find that very frustrating, because I often try to send the message that, although most -- I mean, to be honest, let's be very frank about this -- most terrorist attacks in recent history have been conducted by Muslims.
But what I'd like to remind people is that these are not -- Muslims are not -- the majority of Muslims are not terrorists. And although these people are maybe the loudest in Islam, but they're not the majority. And they're certainly not representative. These are misrepresentatives of Islam.
ZAKARIA: And finally, you have four children, and you are a very busy, talented, accomplished woman.
QUEEN RANIA: Thank you.
ZAKARIA: Sarah Palin has five children and is in the midst of hoping to become vice president.
What advice would you give to a working mother of four or five children? How do you manage to make it all happen?
QUEEN RANIA: Never manage to make it all happen, and never expect to make it all happen. I think, you know, the first thing that you need to do is to be kinder to yourself.
Many women think that they have to achieve that perfect balance between family and work and everything else. And that balance just does not exist. There are some days when you feel it's all -- you've got everything under control, and other days where it's just all chaotic.
It's about, you know, reorganizing your priorities every day, about being flexible, about accepting help and asking people to assist you. And it's about having a bit of a sense of humor, and just being kind to yourself.
ZAKARIA: Queen Rania, thank you so much for being on the show.
QUEEN RANIA: Thank you very much for having me.
ZAKARIA: Known around the world for her intelligence, elegance and outspokenness, Queen Rania of Jordan has divided opinion between those who feel she should take a more traditional role and those who see her as a shining example for modern Arab women.
She was in New York recently, and she joined me to talk about the role of women in Islam and how to promote the voices of moderation within that religion.
ZAKARIA: Queen Rania, thank you so much for doing this.
RANIA AL ABDULLAH, QUEEN OF JORDAN: Thank you. It's a pleasure to be here.
ZAKARIA: Let me ask you, you're probably the best-known face of women in Islam. And many people talk about Islam, and they worry particularly about the role of women in Islam. And they feel that Islam has placed women in a subordinate and subjugated role.
How do you react to that charge?
QUEEN RANIA: Well, I personally think that Islam, in and of itself, does not subjugate women and does not hold them back. But certain people choose to interpret Islam in a way that does hold women back.
Now, you might ask, why would they do that. And I think there's a lot of men, in particular, choose those interpretations in order to validate and justify their own conservative, traditional and sometimes chauvinistic attitudes.
So, what we need to be looking at is some of these traditional mindsets. We need to challenge some of those attitudes, the social attitudes that hold women back. And that's what we need to focus on.
It is not necessarily that you have to look at, you know, Islam itself. Holy scripture does not hold women back. It's the people that decide to interpret it in such a way for their own, sometimes political, agendas.
The other thing is that, in many of the Muslim countries, they suffer from economic problems. And what I've found, and what development has shown, is that whenever people feel the pinch, whenever the going gets tough, the first to get sacrificed are women. You know, they are always the last in the door and the first out the door. And so, when there's hardship, women's rights tend to suffer.
And so, if you combine those two things -- economic hardship as well as age-old mindsets and very conservative attitudes -- and then you find that women are really sort of suffering. But ...
ZAKARIA: But we see all over the Muslim world women choosing a more traditional form of dress. So, for instance, the first time I went to the Middle East in the early '70s, you'd find women, frankly, dressed as you are. And now you go to Cairo or to Amman and you see more and more of the chador or the veil.
There is a kind of conservatism and religiosity that has taken grip in the Muslim world.
QUEEN RANIA: Again, I think it has more to do with the cultural aspects, with the political climate, with the economic climate, with the social situation in those countries.
A lot of women feel the pressure to dress in a certain way ...
QUEEN RANIA: ... because that's what society -- that's what society pressures.
I mean, again, you know, political leaders sometimes, who have certain agendas and justify them through Islam, put pressure on women to dress in a particular way. Sometimes it's not their own choosing. And sometimes they just feel embarrassed not to be dressed in that particular way.
So, I think we need to look at it deeper. It's not a matter of just religion, because Islam has been around for a very long time. Why is it that we're suddenly seeing this rise, as you're saying, in conservative practice?
For me it has much more to do with the environment in the Arab world rather than the religion itself.
ZAKARIA: Well, do you ...
QUEEN RANIA: And with the ...
ZAKARIA: ... ever get criticized for not wearing a veil?
QUEEN RANIA: Absolutely, you know, very often. But likewise, there are many women like me who do not wear the veil. So, as long as it's a choice.
I have nothing against the veil. And I think that wrongly, many in the West look at the veil as a symbol of oppression.
Now, as long as a woman chooses to wear the veil, because that's her belief and because of her own -- that's a personal relationship with God, so she should be free to dress in whichever way she wants.
And we should be smarter than to apply more meaning to a symbol of clothing than we should, because, you know, all over the world there are many symbols of dress and many ways of prayer, et cetera. We shouldn't judge people through the prism of our own stereotypes.
And I think there has been a stereotype that has developed over -- in the Western world of a women -- a veil means oppression, you know. That is not necessarily the case.
And unfortunately, these stereotypes have been very dangerous between East and West. And we really need to start challenging them, because, you know, they really rob us of accurate perspective.
ZAKARIA: There are also many prejudices about the West in the Arab world.
QUEEN RANIA: Absolutely.
ZAKARIA: When you poll Arabs, they still -- 30 percent feel that 9/11 was something that was actually perpetrated by the American government.
How do you -- how does one change that?
QUEEN RANIA: There was an interesting Gallup poll that came out earlier this year in which they asked many in the West if they thought that the Arab world was interested in improving relations. And the majority said, no, they don't.
And likewise in the Muslim world, they asked if the West was interested in improving relations. And they said, no.
But on the positive side, overwhelming majorities on both sides said that the quality of the relationship between East and West is something that is important to them.
So, the problem is not that people don't care. It's that they don't see their care reflected. So, it's very important for us to start creating platforms for dialogue.
I, for example, did a small -- I had a small project on YouTube, where I had a page, and I encouraged people to send in their stereotypes, and we started to try to challenge them. And, you know, the idea was to get people to question their assumptions and to question certain beliefs that they held to be true.
And that was a very enlightening experience, because there was a lot of anger out there. There was a lot of misunderstanding. There was a lot of ignorance.
But that is just a drop in the ocean of what needs to be done. I think we need to take these initiatives at all levels.
ZAKARIA: But in some communities, it isn't just a small minority. If you look at, for example, the Palestinian community, I mean, you are yourself Palestinian. But if you look at the Palestinians in Gaza, they elected Hamas and a Hamas government.
How should the West deal with the situation where you have an elected government that espouses a certain kind of terrorism, does not believe in a two state solution to the Israeli-Palestinian problem?
QUEEN RANIA: Well, in my mind, the success of Hamas has been a result of the failure of the international community to deliver to the Palestinian people. In my mind, their success has been a result of the sense of hopelessness and helplessness of the Palestinian people.
They really could see no end of the -- no light at the end of the tunnel. And they were perceiving the Palestinian Authority through the government of Mahmoud Abbas as being inefficient, as not delivering. You know, their way of life has been going from bad to worse.
If you look at Gaza, for example, unemployment is now at over 50 percent. Over 80 percent of the people living there rely on U.N. organizations for food, for example.
So, you know, this is a situation that's not tolerable. They don't have access to basic health services, schools. Roadblocks are all over the place, so you can't even move.
So, in a situation like that, I think out of desperation people must have elected Hamas, because Hamas were viewed as providing social services, of, you know, giving -- opening kindergartens for kids, of providing education for girls, et cetera.
But at the end of the day, the Palestinian Authority is the -- we view it as the legitimate representative of the Palestinian people. And the sooner the infighting inside of the Palestinian camp ends, the sooner they can start having a unified stand that really delivers to the Palestinian people. Because at the end of the day, it's the Palestinian people who are paying the price.
And the onus is on the international community to try to embolden and strengthen the moderate hand, so that the moderate hand can show that it's delivering to the people. And that's where they will be able to have more power and more leverage.
I don't think people by nature are extremists. You will never find a population of extremists. Extremists have existed throughout the centuries on all religions. And what happens is, extremists start to have more leverage when the situation is bad.
ZAKARIA: And we will be right back.
ZAKARIA: You've been an early supporter of Obama.
ZAKARIA: Do you think that he would handle this better?
ZAKARIA: Who would be secretary of Treasury if you had to pick?
SOROS: Well, I don't know if should answer that question.
ZAKARIA: Would you serve if you were asked?
SOROS: No. I'm a little bit old. I would certainly be available with advice. I'm even available to this government with advice. But I'm not going to ...
SOROS: No, no. I mean ...
ZAKARIA: People say that you fund the Democratic Party. You've seen the - when you see things like the Saturday Night Live skit, what does it make you think?
SOROS: Well, it was very flattering, of course.
(BEGIN VIDEO CLIP FROM SATURDAY NIGHT LIVE SKIT)
WILL FORTE AS GEORGE SOROS: So, what became of that $700 billion? Well, basically it belongs to me now.
Actually, it's not even dollars anymore, but Swiss francs, since I have taken a short position against the dollar.
JASON SUDEIKIS AS PRESIDENT GEORGE W. BUSH: Oh, really? That's not good.
FORTE: You're not to speak. I don't like you.
Yes, the U.S. dollar will have to be devalued sometime next week, either Tuesday or Wednesday. I haven't decided which yet. It will depend on how I feel.
FRED ARMISEN AS REP. BARNEY FRANK: Thank you very much, Mr. Soros. You're a great man.
FORTE: Yes. Could I just add that, even though you know what's coming, you won't be able to do anything about it.
KRISTEN WIIG AS HOUSE SPEAKER NANCY PELOSI: You're a wise man, Mr. Soros, and a powerful one.
ARMISEN: You are better than us.
(END VIDEO CLIP OF SATURDAY NIGHT LIVE SKIT)
SOROS: It was funny. But ...
ZAKARIA: Do you think that you have - that rich people have undue influence in politics in America?
SOROS: Yes. Yes.
ZAKARIA: But given the rules, you're not going to back out.
SOROS: No. I mean, there are other rich people who have influence. I don't - I try not to abuse - I mean, I don't think that I misuse my money.
I don't use my money to gain political influence for my private interests, which is what many rich people do, and what, in a sense, market fundamentalism does, because it is in the interests of people who have a lot of money to have as little taxes as possible.
I actually believe that there is a need for taxation, that this anti-taxation position is actually false, because the government is supposed to provide services, and those services cost money. And somebody has to pay for it.
ZAKARIA: Tell me what you think the geopolitical or geoeconomic effects of this financial crisis are.
Are we witnessing the kind of de-Americanization of the global financial system? In other words, are countries going to not rely on America as the center of finance?
I ask this, because one of the puzzling moves over the last few weeks has been, with all these calamities in the United States, the dollar keeps strengthening.
ZAKARIA: Because in a strange way, there's a flight to safety. And the only thing people trust is the dollar.
SOROS: No, there's a technical reason. There's a shortage of dollars, and the dollar has been oversold.
ZAKARIA: So, in the medium term, you suspect the dollar will decline and America's central role will decline.
SOROS: I think that, in many ways, this brings home the decline in America's position in the world, because we have over-consumed. The Chinese have produced a lot more than they consume, so they built up reserves. We built up debts; they built up assets.
And the same applies to the oil-producing countries. So, there's been a tremendous power shift.
ZAKARIA: Do you think this power shift is permanent?
SOROS: America will still be a leader - if not the leader - of the world. And in fact, if America uses its position to cooperate with other countries, it can reemerge as the leader, and the world very much needs that kind of leadership.
ZAKARIA: George Soros, a pleasure to have you on. The book is fascinating. Thank you.
SOROS: A pleasure.
ZAKARIA: And we'll be back.
ZAKARIA: And we're back with George Soros.
Tell me what it is that you think should be done, because I've been reading you. You wanted a different kind of plan than Paulson's plan. But it appears that what is being done now is much closer to what you wanted. That is to say, the banks are being recapitalized, or at least some of them are recapitalized.
SOROS: But they are not yet. You see, what has happened is that - I said that the Paulson plan was ill-conceived. It was basically the same kind of financial engineering that got us into the trouble that they wanted to use for getting us out of it. And it was just the wrong thing.
And it's very - would have been very harmful to waste - I mean, unfortunately, he has been behind the curve all the way, and still is. And that's why ...
SOROS: ... the market is now collapsing. He just is not able to sort of come to terms to what needs to be done.
ZAKARIA: Why do you think that is?
SOROS: Because I think that he has bought into this market fundamentalist ideology. He did not want to dilute the shareholders, which is what is necessary at the present time.
ZAKARIA: Do you think not bailing out Lehman was a mistake?
SOROS: Yes. That's what actually kind of unleashed the current phase of meltdown.
And unfortunately, the authorities have lost control of the situation. And that's why the markets are behaving this way.
ZAKARIA: But now, aren't they - Paulson has announced that they'll recapitalize the banks and ...
SOROS: No, they haven't. He has not announced. And it's very important how it's done. I think it could be done, this $700 billion could work. Although you also have to do something to stabilize the housing market.
ZAKARIA: Right. But first let's talk about the recapitalization.
What do you want that's different from what he said this week?
SOROS: It needs to be done properly. And in this way, I think he could certainly - I would be, for one, would be very interested in buying into some banks at distress price, and others would, too. So actually, you could mobilize private capital. You would then replenish the banks.
Then you would say, for the time being, we lift the minimum reserve requirements. You don't need to have eight percent; you only need to have six percent. So you can increase your balance sheet, then the banks would start competing for loans. It would turn everything around.
But as I say, the other element that needs to be dealt with is the ...
ZAKARIA: The housing.
SOROS: ... stabilizing the housing market.
ZAKARIA: OK. So, let's talk about the other element, which is stabilizing housing, because it is housing that is ...
ZAKARIA: ... the underlying asset that keeps going down.
SOROS: Yes. If you - and it is liable to overshoot. So, what you need to do - you can't help the market's going down when it's above sustainable levels.
So, it's not a question of stopping the market from going down, but stopping an overshoot.
ZAKARIA: So, how would you do that?
SOROS: Basically, the important thing is to reduce the number of foreclosures, because foreclosures are putting extra pressure on. Which means that the mortgages have to be renegotiated, and a new form of mortgage issued, which is a sounder mortgage than the current one, to replace it, which the householder could afford to pay and would not exceed the estimated value of the house. In fact, let's say it would not exceed 85 percent of the estimated value of the house.
And the rest would - the loss would be absorbed by the mortgage owner. But the loss is less that way than the losses that they are going to suffer if the house goes to foreclosure.
ZAKARIA: But, so, what you would do would effectively renegotiate all these mortgages, so that people are not foreclosed on ...
SOROS: That's right.
ZAKARIA: ... in some way or the other.
SOROS: That's right.
Now, they will stay in their houses. That would reduce the supply. And since - and then, mortgages would be available at the advantageous - basically at an interest rate based on the government bond market, because it would be guaranteed by the government up to 85 percent of the value of the house.
So, people would then, who are currently renting, would want to buy.
ZAKARIA: And this is good social policy also, in a sense, because keeping people in houses ...
ZAKARIA: ... is good for the neighborhood. You evict somebody from a house ...
ZAKARIA: ... the value of every house in the neighborhood would go ...
SOROS: It reduces - it reduces the social damage, and it just - it would stabilize the whole situation.
It would, of course, result in losses, which would be then made up for by the recapitalization of the banks, so that you have a banking system that can finance business.
So, this way you would - with some loss, of course - re- establish. And you would have a short recession, not a long one.
ZAKARIA: George, you are in an unusual position. You have been a skeptic or a critic of this new globalized world of finance, of the deregulation, of the enormous fluidity of capital markets - but you have massively benefited from it. You have been able to play the game that you play in the hedge fund space, precisely because of all these forces.
So, is it a good thing, or is it a bad thing?
SOROS: Well, there is no contradiction, because I think I understand how it works, and I understand its flaws. And so, I seem to be reasonably successful as an investor.
But as a citizen, of course, I would like - first of all, I would like the market mechanism to work better. It's much better than government controls.
So, I'm a believer in the market system. But I also recognize that the market system is flawed, because all human constructs are flawed, and we need to improve them. And I hope to see it improved.
ZAKARIA: But government then would also be flawed. I mean ...
SOROS: Well, of course, government is - I mean, this is the important thing to learn. I mean, this is what my book tries to explain, that it is the human condition that perfection is unattainable. And just because, let's say, socialism has failed and government controls are inefficient doesn't make markets perfect.
Markets are also imperfect. So you do need regulation, knowing that the regulators are also human.
And what is worse, they are bureaucratic and they are subject to political influences, so you want to rely on them as little as possible. So, you want as little regulation as possible, but you want better regulation.
ZAKARIA: We'll be right back with George Soros
ZAKARIA: George Soros knows more than almost anybody about how markets operate, but he also has genuine insight into how the world operates.
Soros has been one of the most successful investors on the globe. His Quantum Fund, one of the original hedge funds, has an unequaled record of performance. And last year, at 77, he came out of retirement, made some massive bets, and by one account netted himself personally $2.9 billion.
I can't think of anyone better suited to help us understand this crisis. George Soros, welcome.
GEORGE SOROS, CHAIRMAN, SOROS FUND MANAGEMENT: A pleasure.
ZAKARIA: Now that the government - the United States government, is guaranteeing almost every financial instrument in the country.
SOROS: Yes, yes.
ZAKARIA: It can't do this indefinitely.
SOROS: So, you do need this kind of government guarantee. Without it, there would be utter collapse. Right? And this is generally now recognized, which means that the institutions that have this kind of insurance backing them up must be regulated.
SOROS: And so, you need to improve regulations.
ZAKARIA: But can you keep these guarantees indefinitely? Do you foresee a future in which finance is going to be much, much more heavily regulated?
SOROS: Well, it certainly will be. And the slower we move, and the more reluctant we are to do the right things, the more money we'll have to throw at it.
The one thing we have decided, that we are not going to allow the financial system to collapse. That's what happened in the '30s. We don't want that again.
We have crossed the Rubicon. We have started throwing money at the system, and we will keep on throwing money. And this ...
ZAKARIA: And eventually, do you think, because of that fundamental crossing of the Rubicon, eventually the government will win? By which I mean ...
SOROS: Yes, I think eventually, because they do have infinite ability to print money. OK? But the damage will be greater, the cost will be greater.
The whole thing - this $700 billion plan - if it had been better constructed, if they had thought about it earlier, if they would deal with the housing situation, the damage would be less.
So, this government, because it doesn't believe in government, is doing the wrong things. You need a government that believes in government. It also believes in markets and wants to give markets the best, the greatest opportunity, but is trying to govern well.
So you need better regulation, not more regulation.
ZAKARIA: What does this do to America's balance sheet? I mean, the Fed is taking on these huge liabilities. The Treasury is going to spend all this money.
Are we going to be able to make up a lot of this money? Is this presenting the United States with a kind of bleak fiscal future?
SOROS: No, yes. You see, we have gotten into the habit of consuming 6 to 7 percent more than we are producing. And that game is finished. That was part of the bubble. It was one, globalization.
America, as the center of the globalized financial markets, was sucking up the savings of the world. You know, China was buying government bonds.
And this is now over. The game is out. So, it does mean a very serious adjustment ...
ZAKARIA: We'll have to ...
SOROS: ... for America.
ZAKARIA: Which means we'll have to save more.
ZAKARIA: We'll have to live within our means and ...
SOROS: Yes, yes. Yes, we have been using houses as a piggybank, taking equity out of the mortgages. And that's what we used for savings - instead of savings.
ZAKARIA: What was fueling this bubble?
SOROS: Every bubble has two components: something - some real trend, and a misconception about that trend.
Now, the real trend has been credit expansion, ever-increasing use of leverage. And the misconception has been what I call market fundamentalism, the belief that markets correct their own excesses, that you can leave it to the markets, give them free rein.
And, of course, that's false. The markets don't tend towards equilibrium. And occasionally, therefore, they create financial crises.
But it really started with President Reagan, who talked about the magic of the marketplace, Margaret Thatcher. You see, when they came to power in 1980, then this belief became the dominant creed. And this, then, led to the globalization of markets, the deregulation of markets and the increased use of leverage and all those financial engineering.
Now, since markets don't tend towards equilibrium, but are - left to their own devices, go to extremes and create bubbles. And then the bubbles burst.
We have had a number of financial crises since 1980, and quite a few of them. But each time the authorities intervened, and, you know, merged away the failing institution, stimulated the economy if necessary, lowered interest rates, fiscal stimulus, and so on.
And so, the crises, the previous crises actually reinforced the mistaken belief that markets correct their own excesses.
ZAKARIA: And why isn't it working this time? Because they're trying to do all those things.
SOROS: Because they've reached the end. In the end, bubbles - if the bubbles contain a misconception, as they always do, then it can't be maintained forever. You know, you can grow a very long way, but, in the end, reality rears its ugly head. And that's what happened now.
So, the housing bubble acted as a detonator that exploded the super bubble. So it was like in a, you know, an atomic bomb. You have a small explosion that creates a big explosion. So we had the small explosion in the subprime.
And if you recall, Bernanke at the time said, well, that's a $100 billion hit. We can easily absorb it. But it now turned into what, a $2 trillion hit, because all - one thing after another, because this whole, enormous construct is built on false conception.
It seems, of course, unbelievable. How can such a powerful machine run on false premises?
But that's what distinguishes social constructs from mechanical constructs. If a car is, you know, designed badly, it just won't get you there. But badly designed institutions do actually exist.
ZAKARIA: As long as everybody believes in them.
SOROS: Every ...
ZAKARIA: It's all based on trust.
SOROS: That's right.
ZAKARIA: Is it also going to overshoot on the downside and just in the way that it overshot on the upside? And are we now in that phase?
SOROS: Well, you see, the credit markets have been in distress now for quite some time. The stock market finally is catching up and is now in a sort of capitulation phase now, in the last few days.
ZAKARIA: Do you see a bottom?
SOROS: Well, of course, there will be a bottom. But, you know, one of the things that my theory says, that you can't actually predict the future, because the future depends on the decisions that people take, what all the authorities react, and so on.
So, while you can predict a trend, and you can predict that the bubble is eventually going to burst, you can't tell when. And that's how, for instance, I thought that in '98 already, it would come to some kind of a climax. And I was wrong.
ZAKARIA: We'll be right back with George Soros.
In an interview during a CNN show, Global Public Square (GPS), the host Fareed Zakaria talked about the financial crises with George Soros asked him what he would do to end or help this financial crisis.
Soros pointed out that the marked needed a kind of government guarantee now. And that this generally was now recognized, which meant that the institutions would have a kind of insurance backing though government guarantee that must be regulated. However, Soros did not believe in more but improve regulations.
When Zakaria asked Soros if he though that he had or in general that rich people would have undue influence in politics in
Soros specified by saying he wouldn’t use his money to gain political influence for his private interests, which was what many rich people had done, and what, in a sense, market fundamentalism did, because it was in the interests of people who had a lot of money but were only willing to pay as little taxes as possible.
Then Soros explained that he actually believed that there was a need for taxation and that this anti-taxation position was actually false, because the government was supposed to provide services, and those services would cost money. And that somebody would have to pay for it.
He continued by noting that he thought that, in many ways, this had brought home the decline in
In other words, as I see Soros response, the republican government, starting with Ronald Regan, has, with the help of market fundamentalism, cheated the American governmental treasury out 70% of the tax-revenue needed to run a responsible government by continuously lowering taxes, especially on the wealthiest in the United States of American. Moreover, the mentality of the American people of over-consumption has lead to the current crises. Only a fundamental change in these behaviors can lead the world to a stable economy again.
“BELIEVE the strength of our nation lies with the individual and that each person’s dignity, freedom, ability and responsibility must be honored.”
Where were these principles over the almost 8 years of George W. Bush ?
Instead our personal freedom has been reduced and replaced by fear. We have lost respect and honor throughout the world.
“BELIEVE in equal rights, equal justice and equal opportunity for all, regardless of race, creed, sex, age or disability.”
Equal justice and equal opportunity for all?
Where did the George W. Bush administration show equal justice, when hundreds of people are still detained in Guantanamo without any legal rights under laws created by the administration itself to give them the right?
Do Americans pay equal taxes on their income or do the wealthiest pay a little less because the Republicans think that all means all the wealthy American have equal justice and equal opportunity for all?
I don't want to discuss the republican view on their same sex ideology here but it also shows how Republicans interpret their principles of equal rights regardless of sex.
"BELIEVE free enterprise and encouraging individual initiative have brought this nation opportunity, economic growth and prosperity."
Free enterprise in the US capitalism has led us to the worst crisis since 1930s.
The free-market administration has diminished economic growth and prosperity.
The George W. Bush administration has encouraged the principle of no governmental oversight or involvement, which has given the investors a blank check to do whatever they thought leads to growth and (their own) prosperity.
So where did the George W. Bush administration follow its next principle?
"BELIEVE government must practice fiscal responsibility and allow individuals to keep more of the money they earn."
The George W. Bush administration followed the principle to allow individuals to keep more of the money they earn. Consequently this principle was only applied to the CEOs and corporations such as Exxon-Mobil. They have kept more of their money the earned.
What about the rest of the Americans?
I could continue on and on.
Think and not just recite whatever you hear!
“Anxiety feeds anxiety”, said President George W. Bush today.
This comment comes from a man who has build most of his Presidency mostly around fear! Looking at the free-fall of the Stock market, one wonders, how one would not develop a feeling of fear.
It was said that ‘the current crisis started with a burst housing bubble, which led to widespread mortgage defaults, and hence to large losses at many financial institutions.’
However, was this the only problem? Or could this current crisis be also related to the American mentality of spend, spend, spend?
If the fundamental believes in saving and investment are themselves seen as not essential to the economy in the short term, what then is essential? Shouldn’t we learn from this crisis and rethink our spending behavior, especially this unlimited credit mentality.
Shouldn’t we rather go back to the “old” principle of living within our means and spend only as much money as we can truly afford?
I know such suggestion does not ring well in the ears of the greediest who have been cheering us on to spend, spend, spend, to jump-start the economy.
However, wasn’t this mentality what got us into this mess in the first place?
Think about it!!
The first thing you should know about Wen Jiabao is that he is quite different from other Chinese leaders of the modern era. In China, his people have a nickname for him - Grandpa Wen.
After this year's disastrous earthquake in Sichuan, he flew immediately to the devastated area, went out among the people to comfort them and met with many individually. He's more like an American politician than a Chinese apparatchik.
He is also, of course, an agile politician inside the labyrinthine ranks of his own party. A geologist by training, he manages to push reform through without alienating this conservative opponents.
There were some conditions to my interview with Premier Wen. My condition was that I be allowed to ask any questions I wished, which the Chinese accepted. One of theirs was that I not comment on or characterize the substance of the interview. So I won't - except to say that I thought it was the most open and frank conversation I had ever seen or read with a Chinese leader.
WEN JIABAO, PREMIER OF CHINA (voice of interpreter): Before we begin, I'd like to let you know that I will use the words from the bottom of my heart to answer your question, which means that I will tell the truth to all your questions.
ZAKARIA: I look forward to the chance for this dialogue. And I begin by thanking you for giving us the opportunity and the honor.
The first thing I have to ask you I think is on many people's minds. What do you think of the current financial crisis affecting the United States? And does it make you think that the American model has many flaws in it that we are just recognizing now?
WEN (voice of interpreter): The crisis that occurred in the United States may have an impact that will affect the whole world.
Nonetheless, in face of such a crisis, we must also be aware that today's world is different from the world that people lived in back in the 1930s.
So this time, we should join hands and meet the crisis together. If the financial and economic systems in the United States go wrong, then the impact will be felt not only in this country, but also in China, in Asia and in the world at large.
I have noted the host of policies and measures adopted by the U.S. government to prevent an isolated crisis from becoming a systematic one. And I hope that measures and steps that they have adopted will pay off.
ZAKARIA: Do you think you can continue to grow, if the United States goes into a major recession?
WEN (voice of interpreter): A possible U.S. economic recession will certainly have an impact on the Chinese economy, because we know that 10 years ago the China-U.S. trade volume stood at only US$102.6 billion, while today, the figure soared to US$302 billion - actually representing an increase of 1.5-fold. A shrinking of U.S. demand will certainly have an impact on China's export.
And U.S. finance is closely connected with the Chinese finance. If anything goes wrong in the U.S. financial sector, we are anxious about the safety and security of Chinese capital.
That's why at the very beginning, I have made it clear that financial problems in this country not only concerns the interest of the United States, but also that of China and the world at large.
ZAKARIA: There is another sense in which we are interdependent. China is the largest holder of U.S. Treasury bills. By some accounts, you hold almost $1 trillion of it. It makes Americans - some Americans - uneasy. Can you reassure them that China would never use this status as a weapon in some form?
WEN (voice of interpreter): As I said, we believe that the U.S. real economy is still solidly based, particularly in the high-tech industries and the basic industries.
Now, something has gone wrong in the virtual economy. But if this problem is properly addressed, then it is still possible to stabilize the economy in this country.
The Chinese government hopes very much that the U.S. side will be able to stabilize its economy and finance as quickly as possible. And we also hope to see sustained development in the United States, as that will benefit China.
Of course, we are concerned about the safety and security of Chinese money here. But we believe that the United States is a credible country, and particularly at such difficult times, China has reached out to the United States.
And actually, we believe such a helping hand will help stabilize the entire global economy and finance, and to prevent major chaos from occurring in the global economic and financial system. I believe now, cooperation is everything.
ZAKARIA: Premier, when your country has grown, as you pointed out, 9.5 percent for 30 years - the fastest growth rate of any country in history - if people come to you and say to you, what is the Chinese model of succeeding as a developing country, what would you say the - what is the key to your success? What is the model?
WEN (voice of interpreter): By introducing reform and opening up, we have greatly emancipated productivity in China.
We have one important thought, that socialism can also practice market economy.
ZAKARIA: People think that's a contradiction. You have the market economy where the market allocates resources. In socialism it's all central planning.
How do you make both work?
WEN (voice of interpreter): The complete formulation of our economic policy is to give full play to the basic role of market forces in allocating resources under the macroeconomic guidance and regulation of the government.
We have one important piece of experience of the past 30 years, that is to ensure that both the visible hand and invisible hand are given pull play in regulating the market forces.
If you are familiar with the classical works of Adam Smith, you know that there are two famous works of his. One is "The Wealth of Nations." The other is the book on the morality and ethics. And "The Wealth of Nations" deals more with the invisible hand, that is, there are the market forces. And the other book deals with social equity and justice. And in the other book he wrote, he stressed the importance of playing the regulatory role of the government to fairly distribute the wealth among the people.
If in a country most of the wealth is concentrated in the hands of the few, then this country can hardly witness harmony and stability.
The same approach also applies to the current U.S. economy. To address the current economic and financial problems in this country, we need to apply not only the visible hand, but also the invisible hand.
ZAKARIA: Coming up, Premier Wen Jiabao on Iran and North Korea.
ZAKARIA: China's onward rise has taken many forms - economic, cultural and political. Naturally, it has had an increasingly active foreign policy - so far, somewhat narrowly focused on securing China's interests. I spoke to Premier Wen about China's larger world role.
ZAKARIA: Many people see China as a superpower already. And they wonder, why is it not being more active in political resolution of issues such as the issue of Darfur, or the issue of Iran and its nuclear ambitions.
There's a hope that China will play a role as a responsible stakeholder - to use Robert Zoellick's phrase when he was deputy secretary of state - and that China will be more active in managing the political problems in the world, and that so far, it has not been active.
How would you react to that?
WEN (voice of interpreter): To answer this question, I need to correct some of the elements in your question. First, China is not a superpower.
Although China has a population of 1.3 billion, and although in recent years China has registered fairly fast economic and social development since reform and opening up, China still has this problem of unbalanced development between different regions and between China's urban and rural areas. China remains a developing country.
We still have 800 million farmers in rural areas, and we still dozens of million people living in poverty. To address our own problems, we need to do a great deal. China is not a superpower.
That's why we need to focus on our own development and on our efforts to improve people's lives.
ZAKARIA: But surely, the Chinese government could pressure the Sudanese government, or the Iranian government, or the government in Burma to ease - to be less repressive. You have relations with all three of them.
WEN (voice of interpreter): That brings me to your second question. Actually, in the international community, China is a justice-upholding country. We never trade our principles.
Take the Darfur issue that you raised just now, for example. China has always advocated that we need to adopt a dual-track approach to seek a solution to the Darfur issue.
China was among the first countries that sent - sending peacekeepers to Darfur. China was also the first country that gave assistance to Sudan. And we also keep our efforts to engage the leaders in Sudan, to try to seek a peaceful solution to the issue as quickly as possible.
ZAKARIA: Do you think it would be dangerous for the world if Iran got nuclear weapons? And what do you think the world should do to try to stop that possibility?
WEN (voice of interpreter): We are not supportive of a nuclearized Iran. We believe that Iran has the right to develop the utilization of nuclear energy in a peaceful way. But such efforts should be subject to the safeguards of the IAEA, and Iran should not develop nuclear weapons. As far as the Iranian nuclear issue is concerned, China's stand is clear-cut.
Nevertheless, we hope that we can use peaceful talks to achieve the purpose, rather than resort to the willful use of force or the intimidation of force.
It's like treating the relationship between two individuals. If one individual tries to corner the other, then the effect will be counterproductive. That will do nothing in helping resolve the problem. Our purpose is to resolve the problem, not to escalate tensions.
And I also have a question for you. Don't you think that the efforts made by China in resolving the Korean nuclear issue and the position we have adopted in this regard have actually helped the situation on the Korean Peninsula move for the better, day by day?
And of course, I know that it still takes time to see a thorough and a complete solution to the Korean nuclear issue and, on that basis, to help put in place security and stability in Northeast Asia. But what I would like to stress is that the model that we have adopted, and the efforts we have made, proved to be right in this direction.
ZAKARIA: Since you honored me by asking the question, I will say to you, Premier, that China's efforts in North Korea have been appreciated in the United States and around the world. And, of course, it makes people wish that China would be active in other areas in just the same productive way that it was in North Korea, because we see that it produces results.
WEN (voice of interpreter): We have gained a lot of experience and learned lessons from years of negotiations concerning the Six- Party Talks. And the progress made in the Six-Party Talks also has a lot to do with the close cooperation among the six parties.
ZAKARIA: Up next, Premier Wen Jiabao addresses tough issues - the Dalai Lama and Tiananmen Square.
ZAKARIA: In my conversation with Wen Jiabao, China's premier, one of the most complex and controversial subjects was the discussion of democracy.
Wen has deep experience with the issue. In 1989, he was one of the Communist Party officials who went to Tiananmen Square to talk to the protestors.
I asked him whether that experience had made him want to slow down or stop political reform. Listen to what he had to say.
ZAKARIA: I will take advantage of your kindness and ask a question that many people around the world wonder about.
There is a very famous photograph of you at Tiananmen Square in 1989. What lesson did you take from your experiences in dealing with that problem in 1989?
WEN (voice of interpreter): I believe that, while moving ahead with the economic reforms, we also need to advance political reforms. As our development is comprehensive in nature, our reform should also be comprehensive.
I think the core of your question is about the development of democracy in China. I believe, when it comes to the development of democracy in China, we talk about progress to be made in three areas.
Number one, we need to gradually improve the democratic election system, so that state power will truly belong to the people, and state power will be used to serve the people.
Number two, we need to improve the legal system, run the country according to law and establish the country under the rule of law. And we need to build an independent and just judicial system.
Number three, government should be subject to oversight by the people, and if (ph) you ask us, call on us to increase transparency in government affairs. And particularly, it is also necessary for government to accept oversight by the news media and other parties. ZAKARIA: When I go to China and I'm in the hotel, and if I type in the words "Tiananmen Square" in my computer, I get a firewall, what some people call "the Great Firewall of China."
Can you be an advanced society, if you don't have freedom of information, to find out information on the Internet?
WEN (voice of interpreter): China now has over 200 million Internet users. And the freedom of Internet in China is recognized by many, even from the West.
Nonetheless, to uphold state security, China, like many countries in the world, has also imposed some proper restrictions. And that is for the safety - that is for the overall safety of the country and for the freedom of the majority of the people.
I can also tell you, on the Internet in China, you can have access to a lot of postings that are quite critical about the government. I frequently browse the Internet.
ZAKARIA: What are your favorite sites?
WEN (voice of interpreter): I browsed a lot of Internet web sites.
ZAKARIA: May I ask you about another set of possible talks? The Dalai Lama has said, now, it appears that he would accept China's rule in Tibet. He accepts the socialist system in Tibet. And what he asks for is cultural autonomy and a certain degree of political autonomy.
The talks apparently are stuck at a lower level between the Tibetans and the Chinese government. Why don't you, given your power and your negotiating skills, take the issue yourself, and you or President Hu Jintao were to negotiate directly with the Dalai Lama and solve this issue once and for all, for the benefit of the Chinese people and, of course, the Tibetan people who are also in China?
WEN (voice of interpreter): In many places all over the world, the Dalai Lama keeps preaching about the idea of the so-called autonomy in the greater Tibetan region. And actually, the so-called autonomy that he pursues is actually to use religion to intervene in politics. And they want to separate the so-called "greater Tibetan region" from the motherland.
And many people in the United States have no idea how big is the so-called "greater Tibetan region." The so-called "greater Tibetan region," preached by the Dalai Lama, actually covers Tibet, Sichuan, Yunnan, Qinghai and Gansu - altogether, five provinces. And the area covered by this so-called "greater Tibetan region" accounts for a quarter of China's territory.
For decades, our policy towards the Dalai Lama remains unchanged. That is, as long as the Dalai Lama is willing to recognize that Tibet is an inalienable part of China's territory, and as long as the Dalai Lama gives up his separatist activities, we are willing to have contact and talks with him or his representatives. Now, sincerity holds the key to producing results out of the talks.
ZAKARIA: What action would you like to see from the Dalai Lama that would show sincerity?
WEN (voice of interpreter): Actually, I already made it clear that, when we observe any individual, the Dalai Lama included, we should not only watch what - we should not only observe what he says, but also watch what he does.
His sincerity can be demonstrated in giving up separatist activities. But then, everything depends on the development of the situation.
ZAKARIA: In a moment, some philosophy from Wen Jiabao.
ZAKARIA: China's premier, Wen Jiabao, is a reading man a poet, and I asked him about something he was reading.
ZAKARIA: You have said that you have read the works of Marcus Aurelius 100 times. Marcus Aurelius is a famous Stoic philosopher.
My reading of him says that one should not be involved in the self and in any kind of pursuits that are self-interested, but should be more for the community as a whole.
When I go to China these days, I'm struck by how much individualism there is, how much consumerism there is. Are you trying to send a signal to the Chinese people to think less about themselves and more about the community?
WEN (voice of interpreter): It is true. I did read the "Meditations" written by Marcus Aurelius Antonio many occasions. And I was very deeply impressed by the words that he wrote in the book to the effect that, where are those people who were great for a time? They are all gone, living only a story, or some even just half a story.
So, I draw the conclusion that only people are in the position to create history and to write history.
I very much value morality. And I do believe that entrepreneurs, economists and statesmen alike should pay much more attention to morality and ethics.
In my mind, the highest standard to measure the ethics and morality is justice.
It is true, in the course of China's economic development, some companies have actually pursued their profits at the expense of morality. And we will never allow such things to happen.
We will not allow economic growth at the expense of the loss of morality, because such an approach simply cannot be sustained. That's why we advocate corporate, occupational and social ethics.
ZAKARIA: You've talked about elections many times. Do you think in 25 years there will be national elections in which there will be a competition, there will be perhaps two parties running for the positions such as your own?
WEN (voice of interpreter): It's hard for me to predict what will happen in 25 years' time.
This being said, I have this conviction that China's democracy will continue to grow.
In 20 to 30 years' time, the whole Chinese society will be more democratic and fairer, and the legal system in China will further be improved. Socialism, as we see it, will further mature and improve.
ZAKARIA: On that happy note, I thank you, Your Excellency. I'm sure your people are worried that we've taken a little bit extra time. And I thank you in advance for your kindness and your frankness.