James B. Steele Revisits "America: What Went Wrong" 35 Years Later

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1:01Book club is now in session. In October of 1991, the Philadelphia inquirer published a nine-part series, 73,000 words. America, what went wrong? Two reporters were responsible for that work. Donald Barlett and James Steele, they'd spent two years traveling the country, think sawmills in California, retail floors in West Virginia, meatpacking in Missouri, auto plants in Michigan. When they came home, they wrote that the American middle class was being taken apart on purpose by decisions made in Washington and on Wall Street. Readers at the time lined up on Broad Street to buy reprints. The newspaper got more than 20,000 letters and calls, and the resulting book, America, what went wrong, went to number one on New York Times best seller lists, stayed there for more than six months. In the 1992 campaign, both Bill Clinton and Ross Perot were talking about this book.

2:07I didn't know when I invited James Steele into the studio that it would be at a time when the nation went past the $40 trillion mark in debt, a conversation that we just had. It seems for two at this in that regard, but for quite some time, I have wanted to revisit the subject of America, what went wrong. Sadly, Donald Barlett is gone. But you are here, my friend. Well, delighted to be with you, Michael. Your program is always very stimulating, and the topic couldn't be more topical, of course. I remember hosting the two of you in a full theater of a few hundred people at the the Bucks County Playhouse in New Hope, Pennsylvania. Exactly. Time to coincide with one of your subsequent books. That's correct. Talk to me about the relationship between the two of you before we even get into the subject matter of this book. Well, Donald and I worked together for 40 years, and it's probably a record of investigative reporting team that'll probably never be equaled for various reasons. And we were different people in some ways, but we were committed to the fact that the average person

3:14should be represented in our work. That was kind of the common thread that brought us together. We both reported, which we loved, meaning we were of sound mind. Neither one of us particularly liked to write further, whose amplit we were of sound mind, because writing is so difficult. But we shared the work. We interviewed people all across the country separately, and what we found in those interviews, and what we found in the data, and what we found in the stories of corporations and people. That's what was kind of the bond between us in the very beginning of our reporting. We always wanted to talk about what's happening to people who don't have a voice. That was kind of the thread that bound us together from our very first project back in 1971. It's a story that probably couldn't happen today, because newspapers are diminished, and those that still exist don't have the budget to allow two reporters to go on the road for all that time. Probably right. And in fact, very few at the time did it then. And it

4:17was a tribute to the Philadelphia required leadership, editorial leadership, and their commitment to things, that they let us do this. And in fact, the story started on a much smaller basis. We know it's plans for closing, and people say, well, that's the way the American system is. It's constantly reinventing itself. So we began to go out and look at these plans, and look at the not just plans, but other kinds of industries, other kinds of things from department stores, meat packing, sawmills that you mentioned earlier, just the whole range of things that were being affected by these economic financial deals. So we began talking to people, and looking at the individual stories. And when we came back, Danya always reported separately, just basically to save money, to as many different things as we could, to cover the landscape. We came back, typed up our notes, exchanged our notes with each other. And I might have been in a sawmill in California, he might have been at a glass plan in West Virginia. And we looked at these notes, we thought we were talking

5:22each talk to the same people. People were saying, look, I gave my life to this company. I didn't take enormous wages, the benefits were modest, but it was a job, and I love the job. And then suddenly I'm thrown out. I found another job that pays half of what I was making. I've had to give up a lot of my benefits. Over and over again, we found the same story that people were saying, people who were dedicated, who've done everything by the rules of the American system. And suddenly they've been thrown out. And so what started out as kind of a plant closing series then evolves when we start looking at the data, showing the middle class is really being squeezed here. They're losing benefits, they're not making the money they once did. That heart of America, I mean the middle class is the heart of America, always has been. That's what separates us from people around the world, was imperiled by this. And so that's what was kind of the driving force

6:24that propelled us to write this book in the first place. The series followed by the book. When did you know, as the series now starts to be published by the inquire, when did you know how big this was going to get? I talked about people lining up for reprints and the 20,000 letters that was old school, that was like stamp kind of thing. Was there a moment that stands out where you said to one another, we've really touched a nerve? I think it was after the first article ran in the inquire that that Sunday in October. When you put together something like this, this law, I mean it's almost 24-hour days, there's long days, way into the process. So you're in your cocoon, you're doing the work, you're trying to get this thing locked down, you're checking it, you're trying to make sure everything is accurate. From the spelling of somebody's name to a number here or there, all of that stuff, you're consumed. So we didn't really realize it until after it published that Sunday and the city desk was inundated by calls. Then the next day, people were

7:29lining up outside the building who'd heard about it, who weren't subscribers to get copies of the paper. That's when it hit us that this was different than anything we'd ever done before. Neither of you, both of you, Pulitzer Prize winners, but neither of you economists. How hard was that? I mean the subject matter is pretty dense financial information. Well, that's one of the things that was so interesting about the series. As it progressed, it was heavily into data. We examined everything from what middle-class people were making at a certain point versus what they were at the time of the series. We looked at pensions. We looked at pay-of-corpon executives. So all down the line, we looked at this. The interesting thing about the economics is you don't have to be a Nobel Prize economist to figure out a number of these issues. You can look at broad statistics of occupations. There's a tremendous amount of data out there. The second thing we looked at was

8:33tax data, tax data, all public. So we looked at what was happening there. What was the effect of various tax cuts over time on tax collections? That might get us into the $40 billion question that you were talking about a minute ago, a trillion dollar. But so all of those things, we looked, we used the spreadsheet. In those days, it was a 1, 2, 3, today it's Excel. It's not rocket science. It's a matter of comparison. Okay, the story that you tell is a story of the hollowing out of the middle class to the benefit of the wealthiest among us. And the fingers that you point are toward both Wall Street and Washington. One preliminary substantive question that I wanted to ask. But how much of it was inevitable because we were moving from a manufacturing economy into a service economy? Wasn't this going to happen anyway? Those people in the plants were going to lose their jobs now? Some of that was bound to happen. I think what the problem was though

9:41is that most of our leaders, particularly in the political sector, kept saying, well this is the natural way that these things are going to happen. And secondly, it's not going to be as bad as you may think it's going to be. I mean, the courts in the 70s, when things like the shoe industry was affected in this country, and they're saying, yes, there are a lot of imports now, but the worst is and we'll adjust to this. The problem was the political leadership, if not lying to people, at least was misleading people about what the impact of these imports were going to be. And that was the point we made over and over again. Not that imports per se were bad, but that the public response to this by our politicians, by public leaders continually downplayed the impact of a lot of the imports on the American economy. By the time it was clear what had happened, a lot of those industries were gone and were never coming back. So the main problem was that, secondly, of course, Wall Street made a tremendous amount of money by changing the whole corporate structure of a lot

10:43of those companies that once depended on a domestic workforce that now could ship those jobs off to Southern China and other places. Did something change that enabled Wall Street to purchase and break up companies the way that they do as you describe? In other words, did something change in the law that allowed them to do this for the first time or had it not occurred to Wall Street previously? A lot of it was simply that it did not occur to them. One of the most powerful. We can break it up for its component parts and these people are out of work so be it. That's so be it. And we will use something that's been on the tax code in part of the tax code for years and it was called interest on corporate debt. That had been part of the tax code for years and years. But suddenly in the 80s, Wall Street and others said, well, this is a wonderful way to buy a lot of these companies and then bust them up. I mean, I'll never forget going to a plant in Missouri which had been a little shoe plant, the foreshine. And it had been kind of a model plant for foreshine. Every time they introduced a new brand, they took it there. It was a hard working workforce. It

11:46was a little town with all kinds of Germanic roots at the 100 miles west of St. Louis. And but when one of these Wall Street companies took it over and loaded it up with debt, they needed to pair down some of that debt. So what did they do? They ended up selling that plant in Missouri, putting it out of business for the land and other kinds of things to reduce their debt. So that's what you saw over and over again. And that was fine because they could use the tax right off to finance a lot of that work. So what we saw over and over again was some things that were very often on the books, but have been put to new use. And corporate debt, the interest on corporate debt was a huge issue in the 1980s. It had never been that big before. There's a chart, bless you. There's a chart that accompanies each chapter in the book, really helpful to understand the subject matter for the prologue, the changing face of America, the wage and salary structure of American business,

12:51you write, encouraged by federal tax policies is pushing the nation toward a two class society. Let me just say to my audience parenthetically, 35 years ago you wrote this, the top 4% make as much as the bottom half of US workers. And you talk about what the data had been in 1959 versus 1989 when you did the research. I'm sure today it's just exponentially grown in the same respect. Absolutely. And in fact, when the book went out of print at a certain point, we bought it back into print with an update several years ago, right at the advent of the pandemic. And that 4% when we did the statistics then, rather than 35% it was up to almost 60%. So say it more clearly so people have a take away. The top 4% of the country like salaries, wage earners, so forth,

13:55that 4% was earning the equivalent of the bottom 60% of the society. In other words, 4% had so much, I mean, and what it turns out to be is that the top 1% which we came up with the figure basically had out of 340 million people, slightly over 1 million people were accounting for roughly 30% of the wealth of the country. So all of that was a shift to more and more to the top. And driven heavily by tax cuts and some other benefits that they were able to make use of. And suffering a great deal, the middle class chapter one, the increase in total salaries of people earning more than a million dollars, 2,184% or said differently, the total amount of dollars in salaries funneled to the rich, soared in the 80s as did the number of rich themselves.

14:57Meanwhile, the total dollars and wages that went to the middle class was increased to an average of just 4% a year or 44% over the decade. It was a phenomenon unlike any America had seen in this century. 44% was the increase in total salaries of people earning 20 to 50,000 dollars. 697% was the increase in total salaries of people earning 200,000 to 1 million. Can I just say from a cultural standpoint, this very era that you're writing about is the era that Gordon Gecko Wall Street, in my generation, watched that movie and we wanted to be like him. I want to go make the money that the Michael Douglas character is making on Wall Street. Greed is good. Greed is good. We glorified this. We did. We did. And I think, and people, what often happens with great movements in this country over the years, I'm sort of an amateur of studies, a student of American history,

16:02is that when they're happening, it's not realized. It's only later that you see the magnitude of what's happened. That you see that the middle class is being gutted under, you know, all kinds of problems. But you don't see that very often when it's happening because that's the way the boiling frog, I think they say. Exactly. Because that's just the way history is made. And that's exactly what happened in the 80s. The church you just mentioned, people were walking around the streets of Philadelphia after that, talking about those numbers. Because that particular chart really captured exactly what had happened in the 1980s and why it was so different and why we were headed for trouble. So was it a boiling frog? Did Congress know? Did they need your wake up? Did they realize what was happening? The rules were changing and people were really now all of a sudden being victimized. There were a couple little things under the Clinton administration. He raised the top

17:06rate on the tax code. That happened. Certainly nothing happened on healthcare. I mean, there was some realization among a handful of people that we've got a problem here. But then as soon as the following administrations came in, that went out the door and nobody receded to deal with that. Because it was, you know, one thing, one of the great problems with the tax cuts in the 80s, which is what produced a lot of this, is it's very hard then to increase taxes. Even though what we had a better country over a long period of time, you can't go back in other words, people get used to it. People get used to it. I mean, I just had this conversation about the 40 trillion dollars of debt. Are you prepared to have your taxes increased, Social Security be reduced, Medicare be reduced, right? And everybody wants to protect the status quo. It's human nature. Exactly. Exactly. And that's the problem with once you go through this process. One of the most amazing statistics I ran

18:10across recently, which I played around with, in 1980, the top tax rate on dividends and interest on bank account was 70% for the highest earners. I want to stress that the highest earners, 98% of the population didn't pay that, but just a handful did. And you're always here in the thing, well, if you raise that top rate on folks that make a lot of money, it won't invest. It won't work. It won't invest. And there's other things that it won't do. Well, those taxes were being collected then. And I ran this out. If you had that rate now on that issue, that would have paid for all the infrastructure improvements under the Biden bill in this first year as president, the roads, the dams, other kinds of things, would actually even cover that. So the fact that you're raising taxes on a percentage of the people to get more money, it can have a very specific effect. Okay, but there's no will to get that done where so much political power is concentrated in the

19:17hands of the very people that you're talking about. And a caller referenced Citizens United in a Post Citizens United, your book was written before that. You're absolutely right. And the interesting thing is if you look at campaign contributions, corporations and packs associated with them, they pretty much give equally. And that's one of the reasons there isn't the desire even among a lot of the Democrats to change a lot of this. When you look at the money they spend lobbying, it's overwhelmingly corporations. Corporations are 90 to 95% of the total map at the federal level. You're always hearing about labor unions, strong labor unions, isn't that? Labor unions account for less than 5% of the cost of lobbying Washington. So you can, those are the people, the companies, the ones who really have the power to decide what they want to do and how they want to direct the country really. James Steele is a Pulitzer Prize winner,

20:18co-author of a book that we are revisiting. America, what went wrong? Donald Barlett, his writing partner is gone. We're privileged to have James Steele here for the full hour. It could not be more timely. And I promise I won't keep him to myself. You hear the subject matter. You may call and ask a question, how old are you? I'll be 84 in January. Damn. I mean, you just don't seem to have lost one Iota. Well, thank you very much. Of the command of the subject matter, the ability to explain it, it's remarkable. What's that secret? Well, I've had a good life and I've been a journalist, my entire life, the collection of information and translating that into something people might understand has driven me since the time I was in high school, believe it not. And so I've always, I've always been, I'm one of those lucky people in this world who's done what he wanted to do

21:19his entire life. Good for you. And you've used that skill well. This is Book Club with Michael Smerkhanish from Sirius XM. Hey, before your Q3 call, I've got the campaign brief ready, built from last quarter's data and the competitive landscape. Great. Did you include the differentiation angle the CMO asked for? Already in there. Three angles, no competitors using right now. Just need your approval. Approved. Thanks. Oh, agents, where would we be without you? Somewhere with a lot more tabs open. Create your first Monday agent in minutes at Monday.com. I want the audience to have the benefit of one thing that was said by James Steele to yours truly during the course of the commercial break. And that is, nothing has changed. It's been 35 years since this seminal work, America, what went wrong came out and you could write it today and change

22:25the data. Fair. Fair enough. The numbers change and unfortunately for the worst in many cases. Different programs are causing the problem today. But it's the same overall theme is still there. The middle class is being squeezed. Some things are a lot worse. Like when we wrote about this back in 1991 and 1992, we had a whole section on pensions and retirement. Do you know what percentage of people in the private sector working Americans are covered by pension now? Very few. Two percent, maybe. Yeah. I would guess five. Two. Now that's the private sector. I mean, people today, young people today, they don't even know what a pension is. They don't know what a pension is. And you know, 401K, that's the way you're going. And the interesting thing about that 401Ks came along. Corporate executives hatched this for themselves. And then somebody said, wow, this is interesting. Wouldn't this be needed if we could get everybody on the workforce to go this route to take care of themselves and we'll save all this pension money. I want to take some calls, but I want to

23:27bring one other thing to the surface. It's not like Barlett and Steel were two wild-eyed liberals. Turn loose on corporate American. Not exactly. I mean, I think what happened to us when we went out and looked at the story. We looked at the individual case studies. It might be a shoe plant. It might be a glass plant. It might be a department store. It might be the sawmill. It might be some other entity. Steve. And we saw what had happened. And what the public steps had been taken one way or another that had basically cut the pins out from underneath the people working at that plant. It wasn't just very often folks on the floor. It was middle-level supervisors as well-amid-level managers. A lot of people got hammered by that whole process. Wall Street got enamored by doing big deals that would take these companies over, take them apart, sell each piece for more than was worth supposedly. And people paid the price for this. And that's what

24:35moved us as we got further into the story, those human stories. Bob, you're in Dallas, Texas, from I guess James Steele. Go ahead. I wanted to comment on who has caused what this gentleman is speaking about, the 44% for the 20,000 to 50,000 and the 466% for the 200,000 to a million. It's us. I like to say as far as I know Madonna has never made a dime off me. But I do not deny her the fact that she can come a millionaire. It's people who want to buy it, tighter swift, $200,000 for a ticket for people who can't afford it that I know. So we are to blame for allowing this letting athletes make a hundred million a year while school teachers barely get by. James Steele, any reaction to the gentleman from Dallas? Go ahead.

25:36I don't have any problem with any part of the private sector making this kind of money. People want to buy those tickets. Go that route. Let them do that. But I think the problem I have is we have a tax system that does not tax those folks anymore the way we used to. Taxes because they control the levers of power because they control the levers of power in 1980. Now you're turning me into a democratic socialist. Well, whether it's a democratic socialist or a level or playing field for taxes, we could probably have that debate. But I mean, 1980, what is it? 45 years ago, the top rate on some investments was 70% for the only for the top. Okay, but by the way, no one really paid 70%. Well, some did though. They on the last bit. On the last bit. That's the issue. Their overall rate was probably somewhere in the I'm thinking of what am I thinking of the marginal tax rate? Is that the language that I should be using? Exactly. But the marginal tax rates and the old days brought in a lot of money.

26:40Right. And I think that's, yeah, nobody, nobody ever paid 70%. But many people did pay 70% on that last bit of their income if it was something like stock. So that's fine if people want to buy those tickets and so forth. But let's let's tax all these people appropriately and we don't tax them now. Martin, you're an Indianapolis for James Steele. Go ahead quickly, please. Just a data point. I have a chart in front of me of general motor's employment in my hometown of Saginaw, Michigan that reached a peak of 26,000 in 1979. By 1982, it was down to 16,000. And by 2011, 4,600, my hometown completely hollowed out. James, yes. And I've seen this story across the country. I, we saw it when we did this book originally. I've seen it in subsequent stories I've done as well. Towns that revolved around one or two main employers.

27:47Sometimes multi-generational workforces. My father worked there as son comes on later. I'll never forget one little plant in a town in Nebraska where they made something called the Vice-Grip. It was this marvelous tool that is still on the market. I can't wait. And everybody worked there until the money boys took over that plant and shipped the whole process to southern China. But years after year, those plants were pivotal to those towns where they'd be a medium-sized town like Saginaw, a small town, or a big city. You know, those were good-paying jobs that had retirements that was a way of life for a whole community. And over and over again, you saw that they were just destroyed in so many cities. And nothing is picking really their place in many cases. By the way, chapter two, the chart that begins that discussion, what went wrong, losing out to Mexico.

28:48American corporations are closing plants or slashing workforces in the US and shifting jobs to Mexico. Since 1965, more than 1800 plants employing more than 500,000 workers have been built there most by US corporations. That's a large part of what you're talking about. This is Book Club with Michael Smerchanish from Sirius XM. This is a Monday.com ad. The same Monday.com helping people worldwide getting work done faster and better. The same Monday.com designed for every team and every industry. The same Monday.com with built-in AI, scaling your work from day one. The same Monday.com, the your team will actually love using. The same Monday.com with an easy and intuitive setup. Go to Monday.com and try it for free. Yes, the same Monday.com. Michael Smerchanish program. Listen weekdays at 9 AM East on POTUS, Sirius XM, Channel 124, and anytime on the Sirius XM app. 35 years ago, chapter three begins with another chart,

29:54what went wrong, the amount deducted for corporate interest payments on borrowed money. Soared in the 80s due to a wave of corporate restructuring, the loss taxes ended up exceeding the taxes paid, which was a first. Just say something to amplify this before I take more calls. Well, this is a classic case where Wall Street took something that was on part of the tax code and had been part of the tax code for decades and decided to use it in a different way. Not in a different way, but use it more extensively to buy other companies. Previously, I mean, companies have always borrowed money to buy something else, but this was a case where huge amounts of money were borrowed, that totally acquired somebody else. And sometimes when that happened, there were bankruptcies, or but mainly what happened, a lot of companies couldn't handle the debt, which meant they started closing plants, laying off people, who were part of these otherwise functioning companies. So the corporate debt became a way to reduce their taxes.

31:00There was less tax money coming into the federal treasury, and it also was very damaging for what happened to industries across the country, everything from department stores to steel plants to auto plants and on down the line. It was a very, very destructive thing that happened. You tell the stories multiple times in the book of a company that's acquired and then acquired again, and everybody keeps leveraging it, leveraging it, leveraging it until there's nothing left. Until there's nothing left. And then what do you do? Then you have sort of a fire sale. Right. You sell the property, but in the meantime, the people that work there have seen livelihoods gone. A handful of individuals have made a tremendous amount of money, but a lot of people got the shaft. Exactly. You said it perfectly. Eugene, you're in Georgia for my guest, James Steele. What did you want to say? Well, thank you for taking my call. Y'all make it sound like this happened organically, but the Powell memo, the business roundtable, they were behind all this from the 70s. And we had a 1979, we had a presidential candidate that told everyone

32:07that it was voodoo economics. And then turned around and when he was elected president, he went with the Wall Street in the big business. So that's where we're at and what we got. Was it all planned to Eugene's point, or did it happen organically? I don't think it was all planned. I don't think a bunch of people got together in the log cabin somewhere in the Rocky Mountains and said we're going to take over the United States. And this is the, this is what's in the tax code and the regulatory environment that'll let us do this. But I think what did happen was that there was a reaction to what American workers were starting to earn in some cases and a lot of the industrial sector and that and they saw there's going to be a way to save money by exporting a certain amount of these jobs offshore. They saw that. I mean, that was sort of in the wind at the time. The second thing they saw was that benefits, especially pension benefits were costing companies more and more. So there's a way we can get around that by jettizing the pensions but getting people signed up for 401Ks and telling

33:15them it's the same as a pension, which of course it wasn't. You know what, you know, the average, the median value of 401K plans out there today, $95,000. Try retiring on that versus a guaranteed pension of where it would be 10 or 15 or 20,000 a year. So there's no, I don't think, I don't think there was one thing, but I think what was in the wind were a whole series of theories about lower taxes, deregulation of industries, move more and more stuff offshore, use the financial system to buy these companies in a way that we hadn't in the past. All of that was in the wind and everybody I'm going to ask you a question about whether it could have been avoided when the book comes out, but hold your thought for a second. Instead, I need to ask my colleagues a question. They hate when I do this. Just air our questions allowed, but I'm going to do it now. So T.C.

34:19Dan, I'm drawing such value. Actually, let me check with him first. Can you stay even longer? Sure. You can. Sure. Okay. Well, I have a guest booked at the top of the next hour. And what I'd like to do is push that to the 1130 mark, guys. If we can do that, T.C. That work. Okay. Absolutely. Because I see the calls, the subject matter is so important, and I don't want to feel rushed. I never do this. We don't spend 90 minutes with a guest, but I want to do it with you because I just feel like you've struck such a chord today updating the book and the debt figure. And it all just feels like it's something we ought to extend. I'm here as long as you want. Okay. All right. So that's what we're going to do. So my guest, James Steel, is going to stay for the first half of the third hour. And those of you who are on hold, I know you've got things to do. I'll move more quickly and take your calls. And then everybody should know we have him for an additional half hour to begin the third hour of the program today. T.C. sound like a plan. That sounds like a plan. You know what it reminds me of. It's the

35:23people standing in line to get a copy at the original right. Here we are. Here we are. I'm sure you're I mean, this was at 400 North Broad. Yes. Okay. So I'm sure you're like looking out the window like what are they doing? I know. I know because our office actually looks out. Right. And anyway, anyway, it was an amazing experience to see that. So and a total surprise. This is Book Club with Michael's Mikanish from Sirius XM. I should mention as James Steel is my guest and we're discussing America what weren't wrong. The book's out of print. I bought it. I bought this copy via Amazon and I deliberately wanted the original. There was a reprint with updated data. No disrespect. I just wanted to be back in the moment when you first published this book. Sure. But there is a version that people can go and get. And the version that we updated this several years ago to take all the major points that we made

36:25in back in 1991 and 1992. So it's the original book as it was published with blocks within it saying well what happened to this issue. So it's all the original book. It's just called America what we're on the crisis deepens. And one of the things we thought in fact people are on me now. They wanted me to say we need to up this again. The fact of the matter is that I think you know the big broad currents that we wrote about in 1992 are really the same. What's different are the numbers about what's what's what's happened and not in a good way and not in a good way exactly. Sadly. Lester is in Memphis Tennessee and he asks an interesting question. Go ahead Lester, I won't steal your thunder. Oh yes. I just want to find out. Has immigration policy impacted any of these issues that have brought up in the book. Why miss a steal. It's a great question. Please go ahead. I'm not an expert on this but I'm sure

37:30immigration policy has affected some issues of wages in certain industries. Let's say the meat packing industry. But the other story I've heard is that without immigrants in those industries there wouldn't be enough domestic workers. I don't know that's true or not. But I think in some of those issues you see it and you also see it in a lot of the software industry. A lot of the immigration in there obviously kept down some earnings of domestic workers in that field. But you rightly and wrongly the US is this country where we welcome immigrants in the past and in the whole series of industries have been very dependent on those immigrants. You see stories now in parts of the construction industry in parts of the country are really suffering because they just they can't find the people. Whether that's an excuse so they just do not want to pay them the proper wage. I can't tell you on that.

38:32I asked you at the outset whether it was all inevitable because we were moving from a manufacturing to a service economy. Wouldn't it have happened anyway? Now I want to ask something slightly different. That which you chronicled in the United States. Did it occur around the globe and was it happening at the same time or did other countries look at us and say, hey we can make money in the same way? Western Europe did not go this route in general. I mean obviously Germany and France have opened their doors to some amount of immigration in a way they didn't years ago. But I don't just mean immigration. I mean the hollowing out of the middle class, the closing of the factories selling them part in parcel. They're going that way but not to the degree that we did. And certainly you're looking Japan and Japan in particular has not gone this way at all. And Japan, the industrial sector in Japan is still quite vital. Okay, another question. And if

39:34I'm catching you cold with this so be it. You don't have to answer. Scandinavia, democratic socialism, very much in the headlines these days. Have those countries headed more in that direction in response to what you described in America what went wrong? You know I'm not an expert on that but at the point that one thing I do know about those countries. I've spent some time particularly in Norway and in Denmark and not a whole lot but some. All of those countries have a social network that is so different than the United States. Right. They have true universal health care which changes the equation. I mean we have in this country for people 65, 66. Medicare. Right. But they have it for everybody. Yeah. And that changes the entire nature of work in those places because a lot of people in this country sometimes they don't want to change your job if they've got good health care or if some company buys that. There's some somebody buys that company laser and they've lost their health care. All of those things are so

40:38different here. Scandinavia has that basic social network. I just wonder if it preceded what you've described or if it was something that was in response. Let me welcome Kent in Alabama for James Steel. I'm struggling not to keep them to myself. Go ahead Kent. Yeah. Yeah. Y'all are inspiring me. I'm sitting down the back right in my congressman and and and legislators on the latest issues going on in Washington and it reminds me failing to plan is planning to fail. Short term decisions have long term consequences and you just listed out whether it's the debt whether it's the Iran war border versus immigration tariffs you just plug it in and maybe this is this moment with what what what y'all are saying maybe we can get everybody on board in Washington and just unify and solve these problems. I mean these these are problems that have been around as you guys have said for years and we work in these two-year election cycles much like Wall Street works

41:39and quarterly results. We got to have a longer we have to have a longer decision look at things on a longer perspective solve these problems you just plug in the problem and it's the infrastructure of how we try to solve them. So let me let me let me say something to you and everybody else that you wouldn't know and this is you know one of the reasons why I wanted to touch the original at the end of the book do you know where I'm going with this. What did you publish at the end of the book? We published back in those days we published the names of every congressman and senator and I kind of remember their phone numbers their phone numbers and I think I think for the benefit of those who obviously that doesn't work now but the mailing addresses the mailing addresses you know the Russell Senate office building they can and house office building right etc etc etc etc so and let and let and let people know let let let let folks know how you feel about these things I

42:40mean I through to what you just said can I I say I'm in yeah I did you really you really make your voice hurts but you really summarize the situation really very well. This is Steve in Hartford Steve quickly please for James steel what did you most want to say. I kind of take the issue with employers being vilified for discontinuing pensions you know I see it as a function of the free market and part of the compensation package you know why is the employer the back at why does the employer have to provide pensions and health insurance and all that isn't that more an individual and a government responsibility. James steel go ahead and respond we're limited on time. Well certainly social security is is the primary pension that almost everybody has in that sense but but pensions were a very strong benefit that began appearing from the 60s on in this country and that's that's the only thing we're made in the book. Well you also made the point you also made the point of those

43:42pensions being rated and the pensions were rated by in many cases folks in Wall Street who used that money to then buy other companies to put people out of work and so. Right they would size up that factory say oh that workforce has a big pension and they'd use the money to go and acquire something else. This is book club with Michael Smerchanish from Sirius XM. So we pick up a pack today. Angel Soft. So it's so cool. You know that feeling when too many things fall through the cracks Monday.com was built for that gap. The AI work platform where people and agents work side by side to deliver more together

44:43create your first Monday agent today at Monday.com. Michael Smerchanish program. Listen weekdays at 9 AM East on POTUS. Sirius XM, Channel 124 and anytime on the Sirius XM app. Pulitzer Prize winning journalist James Steele still in studio with me talking about the book. 35 years ago when it first came out America what went wrong. From the jacket the book is described as a solid indictment of how the rule makers in Washington and the deal makers on Wall Street have changed the rules of the game to favor the privilege the powerful and the influential at the expense of everyone else. Expanding on an unforgettable series of articles in the Philadelphia Inquirer this book is the culmination of two years of research by Pulitzer Prize winning investigative reporters Donald L. Barlett and James B. Steele. Assessing over 100,000 pages of documents and interviewing men and women at all levels of the workforce across America. Barlett and Steele have managed to tell the story.

45:46We all suspected in language so clear and graphic so dramatic that every reader will see how the lives of all of us have been touched by the public acts and private greed. America what went wrong a gripping portrayal of the painful dismantling of the American middle class when the book came out 35 years ago was it already too late at the end of the book there are a number of prescriptive measures that you recommend very few of which I think have been followed but could something have been done to write the ship then. I think so and I think any anytime you want to invest in your people you want to invest in the country as a whole that's a good thing as opposed to a tax bill that benefits a tiny percentage of them. So I think you can always do things for the body politic as a whole. Were you disappointed that given all the hullabaloo that surrounded the book Bill Clinton you know waving a copy on the campaign trail Ross Perot doing likewise so

46:47that nothing really substantive came from it? Clinton of course tried to get healthcare reformed and there were certain mistakes he made there. To me the principal one was he put his wife in charge of the committee to do that and I think when the not she's very capable and all of that stuff but the problem is you don't want you need an arms length situation and something like that you might have been able to do some things there Obama later puts in a version of that a smaller version of that you know the desire to change things in healthcare is quite strong in terms of the body politic just like you you look at polls polls say the rich people ought to pay more taxes but we don't enact that in congress. Politically speaking we live in interesting times you and I are discussing this book amidst a rise of democratic socialism a number of candidates have one primary elections we'll see if they can win general elections and yet I maintain that the same the same sentiments that are giving rise to democratic socialists enable the election of Donald

47:53Trump I think that the populist sentiment at both ends of the political spectrum is because of what you wrote in this book your thought. You may be right which is a difficult thing to face in some ways but I think but what what happens when something like this happens in other words the people who responded to Trump in many cases were folks who saw the getting of the industrial sector and what was going on in terms of favoring foreign nations okay no one know it out about and you can I've ever recently been going over some of my old interviews because of just update them for the archives and I can't believe how powerful some of the ones were from the from the 90s where people were going through and you can and when I read them now I say okay you can see why Donald Trump came along right because people were so were not being listened to what was happening to them was not being dealt with but instead rather than dealing with them he has these blanket tariffs which ends up hurting those people rather than going after an industry that might

48:58be threatened blanket tariffs out there right now are you going to affect the people are trying to be shoes for their babies I mean that industry isn't going to come back. Okay Bob in Massachusetts thank you everybody for your patience let's do this for James steel you wanted to say what Bob many many years ago we paid our rink of taxes on an IBM kind people they don't even know what an IBM kind is like a file kind you put your rink them down and you put the tax down that was it and over the years the wealthy have accumulated all of these deductions that favor them and you could be near that pays zero we should have a we should have a tax system that is fair and everybody pays their fees their fees share and in terms of Medicare that deduction that they take out of your pay for Social Security there should be no cap on that it's ridiculous I'm 81 years old I'm still working full time I'm like a damn good living and why my Medicare the deductions of a Medicare

50:01$1,660,000 maybe whatever the cap is is maybe on me thoughts from James steel go I totally agree with you in terms of what's happened in terms of the the deductions that folks at the top have figured out and some of them are a simple thing even like the Medicare that you're talking about but others are a really fundamental ones that don't affect the average person in other words if I let's just say I earned a million dollars and I put it all in stock when I die I could give it all to my daughter and she wouldn't have to pay one cent of tax on that bequist but if I have a million dollars pulled into my IRA right now and I die and I give that to her she's gonna pay anywhere from 250,000 to 350,000 on that because they changed the tax code a few years ago what's the answer according to you well I think you make that in another way passing the stock along I think you should tax that you should you know that's that's the stepped up basis that's famous in the

51:07tax code goes way back that's how rich people stay rich because they don't pay any taxes on that and you could even do that marginally if you had somebody who had only had a hundred thousand maybe you could exclude them from that just like you do with the graduated tax but that's the way the richest people in this country stay rich because they're able to pass that on without any taxation Alan you're in Chicago for James steel quickly go ahead all right the great conversation I'm curious if you or your listeners are familiar with the documentary X-Zero they showed on PBS on Labor Day weekend and it is exactly about the steel industry and the South South plan of Chicago and Indian of Shore with the sale of Wisconsin steel and how they just dismantled everything and then bankrupted pretty much the whole Southland of all the industry jobs and it's a wonderful documentary called X-Zero X-Zero X-Zero I'm glad to know about that Alan thank you for Chicago thank you I love it I'll hand

52:09in hand with your book thank you sir in New Jersey this is Bob Bob for James steel go ahead so much of the discussion that has gone on comes back to Congress and the fact that with the current structure we have in place things aren't going to change and it just brings to mind Charlie Munger the quote show me the incentive and I'll show you the outcome and these folks these folks have no incentive to change and they have no incentive to change the system that's going to affect the most wealthy people because that's where their money comes from I think there's a lot of truth in that and and and and that's one of the problems with our whole the way our financial system where our electoral system has evolved Democrats who may be sympathetic to some of the issues we're talking about right now can't forcefully push a lot of those issues because they're dependent on money to run for

53:10election and this is a built-in problem that we have in this country right now that of course citizens in United has further complicated and made more difficult and until we deal with that in some ways I'm not sure how much success we're going to have there chapter eight is titled Simplicity Pattern Irresistible to Raiders Cliff's Note version is what James this was an online company went back decades women all over the US bought their patterns maybe your grandmother or her mother made dresses other coats who knows from that and corporate Raiders out of New York got an idea that they wanted both my recollection is now the pension fund as well as the company itself and took it over dismantled it put it out of business and that was very common that you saw over and over again with many companies at the time it was the fall of 1979 when the

54:14first of the money men descended on the Simplicity Pattern Company by the time they were finished a decade later a company that once had one hundred million dollars in the bank was more than one hundred million in a whole a lot of people made money along along the route but not the workers right the way the way so much the way so much of Wall Street worked then and actually now is basically by commissions whatever the deal is you take a piece of that and even if the deal itself collapses who cares you've got your money Evan you're in Wisconsin for James steel quickly quick question answer go yes Michael I hear all the problems I know all the problems what I want to hear and I've ordered the book already now but why want to know what should be the first thing that we in the public can do to help change things thank you Evan what should we do what do we do now this is the the toughest question probably that I will face today and it's it's one that hangs over all of us

55:17any public spirited person in this country wants to know what to do and how you do it the best thing you can do is to vote to try to find those candidates who have something in common with the issues that you think are going to be important to you and important to your family and vote for them stay active with that and it sounds almost trite but write your congressman write your senator let them know how you feel enough people do that very often they do respond I'm just so pessimistic without term limits it's the same question as as the forty trillion dollars in debt I think I no one has the incentive because they just want to stay in Washington right and and once you're there for a period of time particularly in the senate but it's actually in the house as well once you're there the money then comes to the incumbent absolutely they've got they've got this built-in advantage and and the money comes from the very interests that are being the beneficiaries of this and I have to tell you have a years ago I was sort of opposed to the idea of term limits I mean

56:20you can vote these people out right I've changed my mind on that because it is too entrenched we see too many examples of people who need to go yep and I think that's the only answer in some cases our remaining moments with James steel in just a moment the book is called America what went wrong and it's thirty five years old this is book club with michael smirconish from serious xm okay remaining moments with our special guest James steel the book america what went wrong Donald barlett his co-author sadly Donald barlett is gone here's what I'd like to do something a little different than we normally do every line is lit and they have been for the duration of James steel's visit I am just going to pop through these phones and you react tell me what you've been sitting on hold that you want this man and everybody else to hear ready Steve you're in Indiana tell me that one thought and I'm going to keep moving well in 2016 I got a twenty five hundred

57:23dollar tax refund twenty seventeen I owed six hundred dollars and I vote ever since nothing changed got it thank you sir for that Marcus you're in alan texas tell us that one thought you want everybody to hear with lost bro correct in what respect in regards to napkin how has been affected oh okay great question thoughts yes but napda again is just a piece of the puzzle the imports from other places probably even been more destructive over time and go back even before napda but yes napda has been harmful no time Matt Iowa quick thought from you let's go sure years ago Alan Simpson said when he met with bowls full sense in committee 180 tax breaks that only the top four percent yet and we should get rid of them and the other one is if their job creators how can we lost jobs when tax

58:27their tax haven't got James steel is laughing as he hears you make that comment do you want to say something about that most of the justification for tax cuts is that they would create jobs right over and over again everybody's looked at that says that's just not true the tax cut benefits the folks who've been paying a lot of taxes for the most part but it does almost nothing to stimulate the economy or to create jobs on any longer inch base David Memphis Tennessee tell me one thing the top one percent of wage earners in this country pay over 90 percent of the tax taxes how in the world I'm so frustrated listen you know pay your fair share is 90 percent from one percent of population not their fair share is that not a lot respond respond to that I think you have to look at that one percent and within that one percent there are a lot of people who could obviously pay more than they're paying I'm not so sure that 90 percent is correct I don't have that right in front of me now one percent of the population pays about

59:30I think it's roughly 30 to 35 percent of the total the total I don't I don't think it's 90 percent but anyway the point is they do pay a lot there's no doubt about that but many of them could frankly easily afford to pay more okay but the standard shouldn't be could you afford to pay more there's got to be a fairness component to it right yes and and you know the way that progressive system worked in the past was the tax rates were much much higher than this and we rightly or wrongly we had a much more balanced society at that time that we do now Debbie you're in Delaware what did you most want to say I disagree with the authors premise that this is not a long-term strategy two years ago Michael I called and asked you to read democracy and change I know you read a lot please don't get defensive but I really wish that you read democracy and change and get Nancy McLean on your show I think this started all the way back in 1919 with Dodge versus Ford Motor Company that said we got a profit high make profit for shareholders only that's the

1:00:30primary purpose of the corporation and I think messaging is going to be huge how do you take these complex ideas and facts and get them out to the public so they understand what's happened so they know how it has to change I think she's really I think she's really onto something with that last comment right this is this is complicated stuff it is complicated and people are busy and the technology has diverted their attention further and we've always known that corporations certainly want to make a profit take care of their shareholders but there's been a much stronger edge to that the last three to four decades than there used to be I mean there was some commitment that corporations had to the to the communities most of that is frankly gone these days and that's what's different James the book was awesome remains awesome it's it's a bit of a depressor to see that it was so pression and the things have not changed but I can't thank you enough for your work and your willingness to come in and discuss it well thank you very much very valuable I feel like

1:01:31you gave so much good information in the course of this time I really appreciate your interest in this because it's a story that continues to need to be told well the truth is that as I've seen headlines over the years and increasingly so recently I've thought of the book ordered the book reread the book and then we had this chance encounter by email and I thought this is the moment I didn't know we'd be 40 trillion in debt by the time you'd get here but I've been wanting to do this for a while just to go back and to say what did you say then and how did it play out and as I say with with a great deal of accuracy so thank you very much thank you Michael

1:02:34and pick up a pack today angel soft