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August 22, 2008

BILL MOYERS: Welcome to the JOURNAL.

Working Americans, and that's most people, are experiencing the "big squeeze." In fact, they're trying to survive one of the most profound social and economic changes in our history. The middle class is disappearing, facing a decline in standards of living. So you'd hope that the Democrats in Denver next week and the Republicans in St. Paul the following week would confront this crisis head on and not just serenade struggling families with a chorus of sympathetic but meaningless sound bites.

As wages stagnate, prices are soaring. Economists call this pain the "misery index." It's a combination of the unemployment and inflation rates, and it's what politicians have in mind when they ask, "Are you better off than you were four years ago?" Well, the misery index is the highest it's been since George Bush's father became president, seventeen years ago.

When it comes to feeling the misery index, however, you don't go to the economists or the politicians. You go to where regular people live. And that's what we have been doing on this broadcast for months now. We've seen how the mortgage crisis has devastated neighborhoods in Cleveland, how workers in Los Angeles are scrambling for a living wage, and how gas and food prices are choking the ability of food pantries to stave off hunger here in metropolitan New York.

TOM MCGARRY: For a while I was very cynical and I looked down my nose at a lot of people, but now I am one of those people that I looked down on.

BILL MOYERS: This week, we go to the city of the hour - Denver, the site of the Democratic National Convention. Nearly 75,000 people will gather in the Mile High City as Barack Obama makes history by becoming the first African American to be nominated by a major party for president.

But outside the convention center doors, history of a different, more prosaic sort is being made. This year oil hit a record high - $147 a barrel when last year, it was less than half that - around $68. A loaf of bread is up 14% from last year, a dozen eggs is up 33%, and pizza makers have seen the cost of their cheese soar from $1.30 to $1.76. Flour used to make the dough has tripled in price. As these prices soar, the value of homes is sinking. One in three home buyers since 2003 now owe more than their property's estimated worth. Not only has home equity plummeted, so has the value of other holdings, like stocks and bonds and pensions, the investments families count on as a cushion during hard times.

So America's middle class, our "fearful families" as some people call them, is taking it on the chin. The history-making nominations aside, all the rhetoric from all the speakers at next week's Democratic Convention will be so much hot air above the Rockies unless the party comes to grip with how people are living and hurting today.

Just imagine what might happen if instead of going to all the shindigs being paid for by all the wealthy donors and corporations next week, the Democratic faithful - and their candidates - spread out across Denver's neighbors, and listened to people caught in the big squeeze. That's what our producer Betsy Rate and correspondent Rick Karr did just the other day.

RICK KARR: The line started early in the morning, outside a school in a middle-class suburb of Denver. Parents and their kids queued up for a little help, something to tide them over in tough economic times. Within a few hours, there were scores of people in line - not for free food, or clothes, or vouchers to take the sting out of gas prices - but for free school supplies. A local aid agency has been doing this for ten years, but this year, far more families showed up than ever before. Jolene Montoya picked up things for her three kids at the event. She says she was laid off a few months ago, so she simply can't afford to buy everything that her kids need for school.

JOLENE MONTOYA: I have a high schooler, a middle schooler, and one just starting school. I, last year, I think it cost me over $200 to buy for just to the two.

RICK KARR: Montoya says she never thought of herself as someone who'd need handouts. She has two college degrees - she even worked as a college recruiter for a few years and just a few months ago, she was working for a big telecom firm and on track to earn about eighty thousand dollars this year. But her firm decided to downsize and Montoya joined the ranks of unemployed Coloradans, about one in twenty people in the state, the highest rate in three years.

JOLENE MONTOYA: At first I thought, "Oh, it's not going to be a problem for me to find a job, because I've never had a problem finding a job before." I mean, I'm going on interviews, probably four a week. And they're just not turning out. They want to pay you $10 an hour. And I can't support a four people family with $10 an hour.

RICK KARR: Now, after three months without a paycheck, the bills are piling up, collection agencies are calling and there's no relief in sight. The week before we sat down to talk to her, she tapped into her retirement account. And she decided to sell off some of her possessions.

JOLENE MONTOYA: I have a TV and, you know, an iPod that I want to get rid of. And, you know I have some child support. I've been saving to pay my rent, but my rent is due, my public service due, my phone is going to get shut off pretty soon. But phone is really important for me to have. As long as I keep my home phone and not my cell phone, that's fine. 'Cause I need a way for a potential employer to be able to get in t in touch with me.

MAG STRITTMATTER: You know, that could be any of us. And really, truly: we look at people coming through our doors as our neighbors, because they could be our neighbors. It could be us.

RICK KARR: Mag Strittmatter runs the JeffCo Action Center - a social-services agency that serves Jefferson County, just west of Denver and ran the school-supplies program.

MAG STRITTMATTER: It takes just one of those situations those lifetime occurrences that could just a curveball is served up. You have no way of recovering from it. And as a result, the downward spiral is quick and quicker than you would like to think in a country like the United States.

RICK KARR: She says the center's serving about forty percent more people every day than it was just a few weeks ago. Some come looking for help from its clothing bank, and from its food pantry, which, every day, gives away two tons of food - that's about six-hundred grocery bags of kitchen staples every day. But Strittmatter says the biggest shock to her these days is who she sees walking through the center's front door.

MAG STRITTMATTER: It's remarkable how many people have, in the past, brought items to us at our loading dock. They gave us clothes, and gave us food, and said, "Here. Use these items to help people in need." They're the same people now who are coming to the building on the opposite end through the front door, and having to ask for help.

RICK KARR: Jefferson County's annual median household income is just over fifty-seven thousand dollars, which makes it part of the most affluent Congressional district in Colorado. It's got all of the familiar accouterments of suburban life - the Chili's, the SUVs, and the shopping malls. But there's something new in the suburban landscape: poverty. Poverty that wears middle-class clothes.

MAG STRITTMATTER: It has definitely arrived and is very much a part of the fabric of suburbia now. You can't escape the fact that poverty is in the suburbs.

RICK KARR: Bruce Meadows is pastor at the Northeast Church of Christ in Montbello, another Denver suburb that's feeling the pinch. The church runs a weekly food pantry and Meadows says that a year ago, about a hundred and fifty families lined up every week for help. Today, he says, up to five-hundred families come.

BRUCE MEADOWS: It was like every five to ten cents the gas goes up we get 20 more people is how we were mapping it out. And so it was amazing that fuel just starting bringing even more people. And so now we have to turn some folks away because we can't afford it.

RICK KARR: He says even when suburbanites fall on hard times, a lot of them refuse to admit that they need help.

BRUCE MEADOWS: The biggest problem that we've seen is when people come here and they really don't want the food and we say, "Oh you can give it to somebody else" and they stick around. And after the food's gone, they walk out of here and I have to, I know that they wanted the food. But the pride gets in the way.

RICK KARR: So he makes a distinction between what his church does and what welfare has traditionally done.

BRUCE MEADOWS: This is not a welfare program. This is a program to help the people survive until this economic down turns. That's what we're doing here.

RICK KARR: Marsha Brown is one of those people. A year ago, this single mother of two and member of the Northeast Church of Christ wasn't thinking about tough economic times. She had a college degree, she was working full-time for a credit reporting agency, and, she says, earning enough to support her family. She thought that she had decent health benefits, too. The trouble started when Brown was diagnosed with high blood pressure, and it turned out that her insurance wouldn't fully cover her new prescriptions.

MARSHA BROWN: So that's when I was frantic. I didn't know what I was supposed to do. I mean, you spend $300. Where you going to get it from?

RICK KARR: Then Brown got laid off when her company closed its Denver office. And yet even as her finances got tighter, she couldn't think of herself as one of "those people" who need handouts.

MARSHA BROWN: At first I thought the food bank program was for homeless people, soup kitchen kind of thing. But come to find out it's for regular people that fall on hard times. And we started participating in that. And by participating in the food bank it cut my cost for grocery, which then gave me the money to spend, on my prescriptions.

RICK KARR: Since then, she's found a new job, but it only pays about half as much as her old one did. So it's even harder to balance her family's budget at the end of the month.

MARSHA BROWN: We look at food bank first. And so once we get food bank, then we decide, okay, do we pay the light bill this month? Or maybe this month we need to pay a little on the light bill, a little on the gas bill, so I can afford to put gas in my car to make it for the next start of the month. So it is juggling. And after a while, after you've been doing this for a little while, you get a little experience at it. And you find out as long as you don't have a shut-off, you're still ahead of the game.

RICK KARR: But the rules of the game keep changing. Take the rising cost of utilities, for example: Xcel Energy - Colorado's largest utility - expects to shut off service to seventy two thousand customers this year; that's one-third more than last year. And it's part of a nationwide trend: Shutoffs are up nearly thirty percent in Chicago, and more than fifty percent in the Detroit area. A record number of Americans have fallen behind on their utility bills. Starting this fall, Coloradans will be paying up to thirty percent more for heat than they did last year. So Church of Christ Pastor Bruce Meadows says the best he can do for his needy neighbors is give them space heaters.

BRUCE MEADOWS: A lot of families coming asking for assistance for utilities. So that was our only cause of - we figured out this is the only way we can help them out. So we get space heaters and heat up one room. That's what it looks like it's going to be.

RICK KARR: Drive down the streets near the Church of Christ in Montbello, and you'll see that home ownership doesn't offer the protection against poverty that it once did. The neighborhoods pockmarked with empty houses - homes that were purchased with sub-prime loans that turned out to be more than borrowers could handle. The Denver area's like much of the country in that regard: City officials predict they'll see forty percent more foreclosures this year than they did last. The state's Foreclosure Hotline is trying to bring that number down.

FORECLOSURE HOTLINE: Hello. Foreclosure Hotline at your service...

RICK KARR: Agents at the hotline connect callers with local housing counselors who can help negotiate payment strategies with mortgage companies. Zach Urban helped get the hotline up and running in two thousand six.

ZACH URBAN: When we first started, we were looking around the country to see city-wide projects and other hotlines that had been set under a similar structure. And we saw maybe five, ten, 15,000 calls a year as our expectation. And we more than doubled that in the first year. So our expectation was half of what we actually got. And we're continuing to see record number of calls, 75 to 100 calls a day.

RICK KARR: To give us an idea of how things look on the ground, Urban took us to the neighborhood where he grew up and where he used to mow this lawn for ten bucks a pop, every summer.

ZACH URBAN: If you want to see the clearest real life example of how foreclosures affect a neighborhood, you can see this line right here. That foreclosure grass, homeowner grass. And there's a big difference. And it's something that a neighbor having a neighbor that's a bank isn't as fun as having a neighbor that actually lives there.

RICK KARR: So this guy is literally the person who owns this house here, is literally paying the price for the fact that this house has been foreclosed. Because I can't imagine that his house is worth as much as it was when this grass was green. And this house was well maintained.

ZACH URBAN: There's a fallout from each foreclosure. And once you get a number of foreclosures in the same neighborhood, that fallout begins to exponentially increase.

RICK KARR: Sherry Herrington lives just a few minutes away from that neighborhood; she got help from the Foreclosure Hotline. She's a single mother of two who's lived in her house for about ten years. She went through a divorce, and even though she was working two jobs - as a bookkeeper for a publishing company, and as a flight attendant - she wasn't earning enough to make her mortgage payments. She fell two months behind.

SHERRY HERRINGTON: The payment was no longer manageable. It became much higher. Once you get behind, it's impossible to get caught up, no matter how much you work.

RICK KARR: The hotline helped her negotiate a payment plan with her mortgage lender but then the airline furloughed her as the U.S. airline industry went through yet another round of job cuts. She says, once again, she's "hanging by a thread".

SHERRY HERRINGTON: We've had nights where we just sit and cry together. And you know, some days you just think there's no hope. You know, we've sat in the home with no electricity for several days. We've been here without water, sometimes for two days at a time, just waiting for payday to come so you could pay that bill, because they're like, "Nope. You've passed the

JOLENE MONTOYA: One of the good things about being unemployed is that I get to spend time with my kids so that was cool - couldn't do that when they were younger because I was always working so hard.

RICK KARR: Jolene Montoya's three months behind on her car payments - that's fourteen hundred dollars; one month behind on her phone and utilities - that's three hundred. And there's another two hundred fifty dollars for her kids' school fees. But the number that has her worried the most is the rent. It's just over a thousand dollars, and she's a month behind. Her landlord is charging her a penalty of ten bucks a day until she settles up. And if she doesn't pay up by the deadline she'll get socked with an additional penalty of three hundred dollars. The bottom line is that by the end of the month, she'll end up paying more than half a month's rent in penalties.

JOLENE MONTOYA: It's like you're between a rock and a hard place. I mean, you're trying to do the right thing by looking for a job every day. I could very well gone and applied for welfare. But I didn't want to be that. I didn't want to do that. I went to college so I wouldn't have to do that. I went to college so I wouldn't have to go and depend on the government for that money.

RICK KARR: Montoya says a lot of her friends and relatives are just as vulnerable as she is just one calamity away from a financial meltdown. She says getting an education and working hard don't guarantee a place in the middle class anymore.

JOLENE MONTOYA: You go to school, and you're not going to have to struggle anymore. You know, this is going to improve your life. And I genuinely believed that. But then the last few years, you know, you get into a position, and it lasts for about a year. And then they lay you off, because they find somebody that will work for cheaper. And that's basically how it goes. It's like the cycle, you know.

RICK KARR: The pain reaches far beyond Denver and its suburbs: More than half of all Americans say they're "struggling" to get by today. Wages are stagnant, or falling, while wholesale inflation is higher than it's been since the early days of the Reagan Administration. Meanwhile, as home prices fall, Americans' net worth is falling, too. It's enough to make single mother Sherry Herrington think that the middle class is a thing of the past.

SHERRY HERRINGTON: I think people are parading around like there might be a middle class. But I think they're so in debt that that I don't really think that exists anymore. One paycheck, and they'd be out there on the street, you know.

RICK KARR: At the JeffCo Action Center, Mag Strittmatter has a message for the political leaders who are on their way to the Mile High City.

MAG STRITTMATTER: Take care of the middle class. Let's remember that, because that's what everyone aspires to do especially if you are in a disadvantaged place. You aspire to pull yourself to have that that place in life. And if it's eroded and gone, what's there to shoot for?

BILL MOYERS: Everyone attending the Democratic Convention next week, especially those fat cats watching Barack Obama's acceptance speech from the million dollar skyboxes at INVESCO Field would do well to heed Mag Strittmatter's words, and those of Ken Rogoff, former Chief Economist at the International Monetary Fund.

At a conference in Singapore this week, Rogoff warned, "The US is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say, the worst is to come."

In other words, both Strittmatter and Rogoff are saying - more politely, of course - "It's the economy, stupid."

When I started in broadcast journalism many moons ago, one of the giants in the field, the late Fred Friendly, told me to remember, there is always more than meets the camera's eye. Subject everything you see to a reality check.

NBC ANNOUNCER: The rousing welcome to the USA team...

BILL MOYERS: While watching the Summer Olympics, I imagined Fred looking down - or up, as it may be - from wherever old journalists gather in the hereafter, mentally telegraphing his protégés still toiling here in the vineyards, to remember that nothing is as it seems.

How about those spectacular fireworks at the opening ceremonies? Turns out the Chinese enhanced the pictures we saw with digital special effects.

And that winsome little girl who sang "Ode to the Motherland" as sweetly as the Emperor's Nightingale? She was a ringer, a lip syncher inserted at the last minute because the real vocalist was pronounced insufficiently adorable by the Chinese government.

Amateur sports? Sure, but nothing is as it seems. Michael Phelps is an amazing athlete, but he was making five million a year in endorsements before the games began. Now sports agents and promoters are salivating at the prospect that he'll be hauling in as much as ten times that amount.

And General Electric, the Big Daddy of defense contracts and the parent company of NBC, stands to generate at least 1.7 billion dollars in profits off these Games.

Nonetheless, among all the picturesque scenes of China accompanying the hundreds of hours of Olympic coverage, NBC has shown us practically nothing of the abuse of migrant workers who built the stadium, or the hundreds of thousands of people evicted to make room for the games, or of the Chinese journalists who have been punished for trying to tell the truth about their government.

Look at these logos of the game's top 12 sponsors. These corporations spent 866 million dollars to become Olympic partners. Yet, when the organization Human Rights Watch asked them to speak out against the Chinese government's abuses, all of them, all of them refused. One corporate executive told Human Rights Watch: "It is not our comfort zone to criticize countries." Another declared: "That is the role of human rights organizations. In this respect we are from Mars, you're from Venus."

That might be okay on Mars: No human beings, no human rights abuses. But here on Earth, human beings suffer from abuses by the powerful. Some of them fight back, against great odds. Zhang Shihe, known on the internet as Tiger Temple - he's been speaking out on his blog which he calls "24 Hours Online," and with our producer Jessica Wang.

ZHANG SHIHE: The underrepresented are the most helpless. But they're all hidden away out of sight, not spoken of.

BILL MOYERS: Zhang belongs to the so-called Lost Generation of China, people whose formal education was stymied by the anti-intellectual furies of the Cultural Revolution. In his youth, this son of a card-carrying Communist worked in a steel factory, then became a bookseller. But after the Tiananmen crackdown in 1989, he shuttered his stores. And today, he publishes on the internet.

ZHANG SHIHE: I've already lived over half my life, and I have less than half more to live. So I document real life - it's the best I can do. I have a duty to record life's truths, since right now the real history isn't being told.

BILL MOYERS: Through Zhang we met this man, an activist he'd heard about through his network of underground sources. Ji Sizun is from Fujian in southern China - he helps people in those rural provinces oppose government injustice.

JI SIZUN: I handle many cases from Shangdong, Zhejiang, Guangxi, Yunnan, Fujian...from these cases it is obvious that people know they are breaking the law, that government officials are covering up for each other. We are strongly against such behavior. This is not a problem limited to the quality of local officials, but a problem of the entire political system.

BILL MOYERS: The Chinese government promised the International Olympic Committee that those wishing to demonstrate would be able to do so. All a citizen had to do was apply for permission. So Ji traveled to Beijing to submit his application, saying he planned to protest official fraud and abuse of power.

JI SIZUN: We want to protest official corruption, no phoniness. This is our lawful right. The Chinese government has made this promise to the entire world; they shouldn't go back on their word. You should do what you say, not lie to the international society, not deceive the common people.

BILL MOYERS: With a small group of media was in tow as protection, Ji went to police headquarters to file his request. One of his friends had come here just days before to seek permission and he vanished.

Right away, Ji was treated as a suspect. For three hours, he was interrogated in a closed room. He emerged defiant and frustrated.

JI SIZUN: We had a heated discussion. They won't approve anything. They won't even accept my application.

BILL MOYERS: As Ji left, plainclothes police kept him under surveillance.

This is one of three parks in Beijing that the government set aside for demonstrations. We didn't see a banner, picket sign or protester in sight. In fact, all these days into the Olympics, the government has yet to permit a single demonstration in any of the official protest zones. Except for strollers, the park was empty, because China claims that only 77 applications were filed, and all but three were withdrawn, says the government, because the petitioners had their complaints satisfied. Those other three? "Oh", says China, "turned down on technicalities." Nothing is as it seems.

Two days later, Ji went back to the police station to ask about his missing friend. Witnesses said Ji was led by plainclothes policemen into a dark sedan, then gone...disappeared.

No American has had a closer look at China's abuses than my guest, Philip Pan. A graduate of Harvard who studied Chinese at Peking University, Philip Pan was the Beijing bureau chief of the WASHINGTON POST between the years 2000 and 2007. He traveled far and wide in the country and his reporting won awards from the Asia Society and the Overseas Press Club. He's now enroute to Moscow where he will be the POST's new bureau chief. But he stopped in New York to talk with me about his new book: OUT OF MAO'S SHADOW: THE STRUGGLE FOR THE SOUL OF A NEW CHINA.

BILL MOYERS: Welcome to the JOURNAL.


BILL MOYERS: We saw so many of the wonders of China, the Wall, the Gorges Dam. We saw these splendid athletes in competition. But there was a lot we didn't see. What were you imagining that we were not seeing as the games developed?

PHILIP PAN: Well, I think there's a lot going on beneath the surface of this beautiful China that's being displayed. There's a struggle really, underway for the future of the country. And a lot of the people pushing for change, and their voices, were not going to be heard during these Olympics.

In the long term, perhaps these games will have a liberating effect on the country. But certainly in the short term, certainly in the run up to the games, we've seen a tightening of controls across the country, not just in Beijing.

BILL MOYERS: Why is that? If they wanted to send a valentine to the west and say, "Look at us, we're really changing," why these crackdowns?

PHILIP PAN: Part of the answer is that the priority isn't really with the Olympics. Their priority really isn't the west. They want to use this Olympics to send a message to their own people, most of all. They want to demonstrate to the Chinese people that their government is legitimate, that it has been successful, and that world approves of the government.

And when I say "this government", I mean the one-party system, in effect. You know, communism as an ideology is dead, essentially. But the Communist Party needs something to justify its continuing rule. And using the Olympics was part of their strategy, I think.

BILL MOYERS: So do you think that they cracked down on dissenters before the games in part, to keep them from spoiling the celebration?

PHILIP PAN: Oh, yes. They're worried about what the Chinese people think of the Party. They don't want the Chinese people to know that there are other voices. They want to present a united front, that this is an effective government, that everyone is happy with it, that this political system, a one-party political system merged with capitalism, can be just as effective as a democratic system in the west. And they want their people to believe that.

BILL MOYERS: Watching President Bush there at the games, I thought back to when he said, "Trade freely with China, and time is on our side." And I thought of President Bill Clinton, who went there and said, "The spirit of liberty is coming to China, just as inevitably, the Berlin Wall fell." Are our leaders making it easier for the Chinese to crack down on dissenters?

PHILIP PAN: That's a tough question. I think we have this assumption in the west that free markets lead to free societies, that capitalism will lead to democracy in China. That it's almost an automatic process. Once income levels reach a certain level there, that this political liberalization is going to happen in China, just as it did in other parts of the world.

But my argument would be that it's not automatic, certainly. You know, we've seen 30 years now of strong economic growth, and the party is arguably stronger now than it has been ever, in these past 30 years. The party has been able to use capitalism to strengthen its hold on power.

At the same time, though, the party has retreated in many ways. Its people have much more personal freedom than ever before. Because so many people have been lifted out of poverty, they have many more options in life.

So it's a mixed picture. But I think it would be naïve for policy makers to assume that this is going to be an automatic process, that, you know, we just have to continue to trade with China, and the political change is just going to happen. This party is determined to hold on to power. And they're not going to let anything happen without a fight.

BILL MOYERS: I was watching the beach volleyball the other night. And suddenly, I got up and looked at the T-shirt I was wearing. And it had a "Made in China" label. Help us understand what life is like for the women who made that T-shirt.

PHILIP PAN: Most of the women in these factories, they're from the countryside, poor villages. Many of them are young, often underage, who have been pulled out of school because their parents can't afford to pay the taxes just based on their farm income. They have to send their children to the cities to make extra income, in order to just pay taxes.

Their opportunities are limited. In these factories, their rights are limited as well. They cannot form unions. They have very few venues to complain about working conditions. And because the labor force is so large, they have little leverage as well, in terms of wages.

At the same time, though, these factories are paying them much more than they could have ever made in the countryside. And so, they're willing to take these jobs, and often times, they improve their lives through these jobs, if they can survive the conditions.

BILL MOYERS: In other accounts, I read of women crammed into dark and damp dormitories, working seven days a week with three days a year off. Their workshops filled with smoke, their eyes burning and watery, the skin on their hands peeling and painful. I read of 50,000 fingers slashed off in China every year, of more than a million workers contacting fatal diseases, of workers trying to organize, as you say, and being beaten and hauled to jail. And the picture that emerges to me is of a communist police state enforcing the most extreme model of capitalism.

PHILIP PAN: There are officials in this party who still cling to the old communist values, I would guess, of egalitarianism, of labor rights. You know, after all, this party did promise a worker's paradise.

And so, there are parts of the party that are concerned about this issue. And other parts of the party are also concerned, just simply because they're worried that if conditions get too bad, they would have a revolution on their hands. But generally, yes. You know, they call themselves Communist, but they've adopted a form of capitalism, capitalism without democratic checks on it, essentially. And so, you have market forces in the extreme, as you say, with very few options for workers to fight back.

BILL MOYERS: What makes them Communist?

PHILIP PAN: Well, that's a good question. I've asked them that. They have long answers about ideology and all that, how this capitalism is only a temporary phase, that they're using this to achieve real communism. But there are aspects of the political system, I think, that recall communism. I don't know if it's the communism that Marx might have envisioned. But it's still a one-party state. They still have a propaganda bureau. They still control the press and the television stations and the radio stations.

BILL MOYERS: But one could say that of fascism, or could say that of any dictatorship, but they still proudly call themselves Communist?

PHILIP PAN: Well, they're not willing to let go of that legacy.

The party has built its reputation on the revolution in 1949, the Communist Revolution. Even though there were 29 years of violence and famine under Mao, Mao is still revered by many people as a hero. They need that history in order to stay in power. It's a history that they've defined. But they need that in order to stay in power.

PHILIP PAN: They call themselves Communists, but they're only in power, really, because they've been able to deliver economic growth now. And they believe that the only way to deliver this economic growth is through this extreme form of capitalism. They're worried that if they allowed checks on the market forces, that if they allowed workers to organize, that their own political power would be threatened.

BILL MOYERS: Last year, there was something of a revolt in several factories, after workers doing 50-hour shifts died of organ failures, the workers rose up and demanded some change. The government seemed, for a while, to be panicky, to be willing to give them some of their rights, even to let them have elected trade unions.

But American corporations, Microsoft, Nike, Ford, Dell, among others, working through the American Chamber of Commerce, threatened to take their business elsewhere if the Chinese government allowed these workers to organize. What should we make of that?

PHILIP PAN: I think it's a little bit more complicated. I think the Communist Party is never really going to allow workers to organize, though. That's the first thing.

BILL MOYERS: Even though the coal miners' effort to organize their revolt triggered the start of the Communist Party many years ago?

PHILIP PAN: That's right, that's right. This party was built on this promise of workers' rights. But right now, they are much more concerned about the economy. And for them, that means suppressing worker rights, essentially. Many of the factory managers themselves are party officials, or are relatives to party officials.

BILL MOYERS: But are American corporations, are we American consumers, is the American government sticking our fingers in our ears while our businesses work with a Communist government to make sure workers don't get their rights?

PHILIP PAN: Yeah. I think American companies, well, let's put it this way. The factories in China that are run by American companies, which are only a few, because most of the Americans subcontract to Chinese factories. The ones that are run by American companies, conditions are generally better. So let's put that out there first.


PHILIP PAN: At the same time, though, most of the products that we purchase here that are sold by American companies; they buy them from Chinese factories. And I don't think they're doing enough.

BILL MOYERS: Like my T-shirt?

PHILIP PAN: Like your T-shirt, almost certainly. It's not going to be made by an American factory. It will be made by a Chinese factory. And I don't think the American companies are probably not doing enough to see what kind of, they don't want to see what kind of standards workers are..

BILL MOYERS: Look the other way?

PHILIP PAN: The interesting thing is, if the American business community wanted to take a stronger stand for labor rights in China, if they wanted, for some reason, to push for the right to organize labor unions, I think the government might consider it. But especially since this is supposed to be a Communist Party. But I don't see any real pressure from American companies to push for labor unions.

Wal-Mart, for example. They don't actually own factories there. But Wal-Mart runs stores all across China. And they've been - even the Chinese government there's actually one labor union in China. It's run by the party. It's not a real labor union. But even that fake labor union, which is essentially a tool of management in most factories even that fake labor union, Wal-Mart doesn't want in their stores.

For them it seems this company it seems, I think this is just that they have a strong anti-union stance, and they just don't want to give into this. Even though it would really not affect their bottom line at all. It's just a principle they have.

But the larger picture is that we have multinational companies, not just American firms, but from around the world. Especially from overseas Chinese communities investing in China. They believe that they're improving the lives of these workers. And in many ways, they are.

At the same time, though, there are abuses. Because frankly, most of these companies subcontract to Chinese companies, and these Chinese managers are often in bed with the party officials. They can easily pay bribes to avoid the inspectors who are supposed to enforce Chinese labor standards. I've heard from the companies, the factories that make goods for Wal-Mart, for example, that Wal-Mart is so insistent on the lowest price, that they are forced to do all they can to cut costs. And inevitably, that would mean tougher, lower wages and longer hours, and less safe conditions for workers.

BILL MOYERS: Here's something we didn't hear about during the Olympics, Philip. A report by the Economic Policy Institute in Washington that the growing U.S. trade deficit with China cost our economy 2.3 million jobs over the last seven years. Are these lost American jobs subsidizing a communist regime?

PHILIP PAN: Well, these lost American jobs are being replaced by jobs in China. And these jobs are taken by people who are even worse off than American workers, and who are, you know, this is a tremendous opportunity for many of these Chinese workers. Their lives are improving.

At the same time, you ask a very tough question. Does the fact that we're improving, that we're helping to improve the lives of people in China mean the government is stronger? And I think inevitably, that's true.

But, you know, what is the purpose of government, we have to ask? Isn't it to improve people's lives? And this is the argument that the Communist government would make, that we have lifted hundreds of millions of people out of poverty. We do have one of the strongest economies in the world. People are freer and they have more income. They're doing better. They're healthier. They're more educated than ever before. And isn't that enough to justify our authoritarian system? That's what they would say.

BILL MOYERS: What you describe is a fusion of capitalism and authoritarianism that can resemble a mafia organization. That's a criminal enterprise.

PHILIP PAN: It is a criminal enterprise, in parts of the country.

BILL MOYERS: The government?

PHILIP PAN: The government; and you'll see party officials arrested all the time for criminal activities.

BILL MOYERS: For corruption?

PHILIP PAN: Corruption.


PHILIP PAN: Corruption is...

BILL MOYERS: Kickbacks.

PHILIP PAN: It's endemic. And the major challenge for the party is, it's a great source of public frustration. It's one of the problems, the leading cause of the last major protest movement against the government in 1989, the Tiananmen movement. It was for democracy, but it was also against corruption, against inflation, against the situation at the time.

You have a situation that party officials really have unchecked power. And so, at the local level, especially in the countryside, they squeeze peasants for taxes, if they're allowed to do that. Recently, they've tried to rein in the tax situation. And now, they're seizing the farmland from peasants and selling it to developers.

If they can, you know, do well enough and promote the economy enough in their communities, they can get promotions. They become like captains in the mafia system. They get more kickbacks. And so, this whole system, there's corruption all over, all from the top to the bottom.

The reason they've been able to stay in power, and the reason that we in the west are frustrated by this assumption that they would fall, is because of the private entrepreneurs. We've always assumed that businessmen would be supporters of political reform, that they would favor rule of law, they would favor independent courts that could resolve disputes and enforce contracts, that they would want some say in the government policy through elections and lobbying.

But in China, we've seen a different picture. You know, in this transition from socialism to capitalism, new markets were opening up almost every day. And if you could get access to those markets, you could make a fortune. So, people who got access to those markets were people with good connections to party officials.

BILL MOYERS: Tell me about the "rich lady chapter" in your book.

PHILIP PAN: I was just going to talk about it.

BILL MOYERS: We've got a photograph from there.

PHILIP PAN: Her name is Chen Lihua. She's one of the richest women in China. She suffered during the Cultural Revolution. She started out as a seamstress. But because of her connections with party officials, I've found in particular, she started out with just a neighbor who happened to go away on an assignment to Hong Kong, and she was left to take care of this man's children.

Started with that one relationship, she was about to build a network of friendships with party officials. And she got access to a new market, which was the real estate market in Beijing. She got access to land. And now, she's one of the most prominent and successful real estate developers in Beijing. Some of those boulevards that you see on television during the Olympics, those were built by her. Some of those buildings are her buildings.

And when I went to see her and asked her, what she thought about the political system, she said, she thought the one-party system was great. She thought it worked very well for China, and for herself, obviously.

BILL MOYERS: She learned a lot from the American railroads in the 1890s, right?

PHILIP PAN: I guess so.

BILL MOYERS: We're talking here of a party that survived Mao Zedong's disasters, that outlasted its comrades in the Soviet Union. A party that suppressed the Tiananmen rebels. What is the secret of their iron grip on an exploding economy like this?

PHILIP PAN: Well, I think an important part is that they've been able to redefine this history that you just recounted. They maintain a sanitized version of history. They've airbrushed out leaders who stood for change. They have rewritten the textbooks.

They've banned all mention of Tiananmen, for example, in the newspapers and on television. The Cultural Revolution, the famine of the Great Leap Forward, the violent purges that Mao was responsible for, these are all things that are no longer taught in Chinese schools, nor discussed really freely in the press.

BILL MOYERS: Flushed, as George Orwell would say, down the memory hole, right?

PHILIP PAN: That's what they're trying to do. But at the same time, I found it inspiring, actually, that there are still people in society who are trying to recover this history, who are trying to preserve it. And it's important to remember that the party's control of this is beginning to weaken.

You know, this has been key to their success holding on to it, but it's already getting shaky. And you have people like a documentary filmmaker I write about in the book, Hu Jie, who was a former air force mechanic, and was a cameraman for the state news agency. So he was at the pinnacle of the propaganda apparatus.

One day, he happens to hear about a woman who grew up not far from where he lived, who was a poet, and who was executed during the Cultural Revolution. He was intrigued by her story. And he spent the next five years of his life trying to find out what happened to her. He loses his job. The police come after him. He ends up working as a wedding videographer to make ends meet.

But he perseveres and keeps trying to dig at this woman's story, and I asked him why and he said that if he didn't do it, no one else would. He just wanted to find out what happened.

BILL MOYERS: What's happened to him?

PHILIP PAN: He's still making films. You know, eventually, his film, it was never released, obviously, in China, in the theatres. But he burned it to DVDs and he put it on line, and he distributed it on these discs. And it became an underground hit. The authorities came to visit him once, and they said, "You know, you're a famous man now. We can't protect you any more." But he continues to make films. He's basically walking this tightrope that many of these people pushing for change walk.

BILL MOYERS: You were the first reporter to learn about the blind lawyer who was opposing the government one child, the sterilization of all these women. How did you hear about it?

PHILIP PAN: He was actually introduced to me by a lawyer in Beijing.

PHILIP PAN: The lawyers in Beijing, they're really at the forefront, not just in Beijing, but around the country. They're at the forefront of something of a revolution, really. Now, the government traditionally in China has a notion of the law as a tool that it uses to manage the behavior of the people, something to regulate and control what people do.

But, there's a new concept of the law emerging in China in the public. People are beginning to see the law as something they can use to protect themselves against the government, something to protect their rights. And also, they believe that the party officials should be accountable to the law as well, that the party isn't above the law.

And lawyers are at the forefront of pushing this change. They're really defining this new profession as they're going. And so, this blind man, he considers himself a lawyer as well. He didn't have a license to practice, but he had studied law.

I met him in a teahouse. Right away, he struck me as an interesting person. Not only because he was blind, but he was so charismatic. He was born in a village in Shandong Province, not far from where Confucius was born.

And so, his educational opportunities were limited. And yet, he had managed to go to college essentially. You know, his majors were, the only major really allowed for people who are blind, which was traditional Chinese medicine. But he took a few courses on the law on the side.

And when he returned to his village, he became something of a legal activist. He had sued on his family's behalf for a refund of taxes, and he won. And people came to him with all sorts of complaints. And they came to him with this complaint about the crackdown to enforce the one child policy. Essentially, local officials were taking women who were pregnant, even if they were seven or eight or nine months pregnant, and forcing them to have abortions.

BILL MOYERS: In order to enforce the one child policy?

PHILIP PAN: That's right. And so, this was their second or third child. And parents who had already had two children were being forced to be sterilized. Obviously, a lot of these people weren't willing to comply, and some of them fled. And what the officials were doing was arresting or detaining their relatives or neighbors, and basically holding them hostage until these people came back and submitted to these operations.

And so, this is not the way the one child policy is supposed to be enforced. It says very clearly in the law that coercive tactics are illegal. And so, he decided to try to file a class action lawsuit against these officials, which is...

BILL MOYERS: This didn't make them happy, did it?

PHILIP PAN: No, it didn't. He came to Beijing looking for help. He found some lawyers, some brave lawyers who were willing to do this. He found some writers who were willing to write about it. And he came to me, as a member of the foreign press, because he thought international attention would help.

BILL MOYERS: Where is he now?

PHILIP PAN: He's in prison now. After the story was published, the authorities suspended the crackdown, and they launched an investigation. But they also put him under house arrest. And about a year later, he managed to escape from house arrest. He said, because he was blind, he could run faster at night, than the men who were assigned to guard him. And he made his way to Beijing.

And I saw him one last time. And the next morning, I got a phone call from a friend of his, telling me that he had been, that two big men had basically grabbed him off the street.

Two things about this story, I think, are interesting, though. One is after he was arrested, there was really a big push in the legal community, which is among these lawyers, who are pushing for better protection of people's rights, to get him out of prison. The lawyers were basically met with violence when they attempted to defend him. Every time they went down the community to try to interview witnesses, thugs were assigned to beat up, to beat them up, essentially.

And they didn't know how to respond to this. Whether they should continue pushing the limits, and confronting this violence, which would put not only themselves at risk, but other people in the community. Or whether they should back off and take a more low key approach.

And this is the dilemma facing all people, I think, all these individuals who are pushing for change in China, in different ways. They have to decide how much can they confront the state, and how much should they try to compromise. And it's not an easy process.

BILL MOYERS: The President said he urged the Chinese to register the unofficial churches. He was pressing for more religious liberty. What's behind that?

PHILIP PAN: Well, I think that's partly or largely a part of, you know, President Bush's own personal conviction on this issue. But you have a situation in China where religion, they say they have freedom of religion. But essentially, that means you have the freedom to worship in the state-sponsored churches. There's a whole network of what we call underground churches, what the Chinese call house churches, that I think believers in these churches even outnumber the believers in the state-controlled churches.

BILL MOYERS: Did you go to some of these churches?

PHILIP PAN: Sure, I did. And there is a lot of fervor. You know, since the collapse of Communism as an ideology. Communism really was a state religion for many years in China. Today, because that's dead, people are really searching for something to believe in. And religion of all sorts, not just Christianity, which is one of the fastest-growing religious in China, but also traditional Chinese religions. Taoism, Buddhism, they're all making a big comeback in China.

And it's beginning to affect the struggle as well. Many of the lawyers I spoke about are Christians. You know they use that faith to strengthen what their convictions, and what they're doing in politics.

BILL MOYERS: Is there a Chinese Solzhenitsyn?

PHILIP PAN: There hasn't been a person with the impact of Solzhenitsyn. And that may just be in part because of lack of attention in the rest of the world. You know, Solzhenitsyn became who he became partly because the rest of the world embraced him, and embraced what he had written.

There are individuals in China writing about the prison system, about the horrors of the past. And a lot of their work hasn't been translated into English. And certainly, it hasn't been published in China, in Chinese. Now, Solzhenitsyn, I think, had his opportunity. He showed up at the right time. Khrushchev agreed to allow his work to be published.

We don't have that kind of thaw yet in China. You have a gradual thaw, but you don't have one of these, what we used to call Beijing springs, where there would be openness, and something like that could be published in China.

BILL MOYERS: So here's the question you left me with at the end of your book: Is this one-party state winning the battle for the future of China?

PHILIP PAN: I think if you looked at it right now at this moment, the answer is yes, that they've had 30 years of success. The economy continues to boom. It seems like it's going to do well into the near future. They have won over many of the private entrepreneurs. Much of the educated middle class is supportive of the government. People are, understandably, not getting involved in confronting the government, because their lives are getting better.

And so, I think right now, the answer is yes. But I don't think that's necessarily going to hold forever. And, I think, there are already, you already see people pushing for change, and they're making progress, slow as it is, and at great cost. But there has been progress.

BILL MOYERS: What can we do?

PHILIP PAN: That's a very tough question. And I think it also echoes some of the dilemmas that these activists face. There is a concern, and I think a legitimate concern, that the more we push for change, we, meaning the United States government pushes for change in China, the more of a backlash there is by the hardliners. It gives the people in power who want to resist change, an excuse to, and it gives them not only an excuse, but it gives them an enemy. They can use this to rally the public, this is another reason they've been so successful. They've been able to manage patriotism and shift that into nationalist support for the party. You know, if you love your country, you must love this political system. You must love this party, as well. And they've been able to do that.

And every time the United States tries to get involved and push for change, they can use that involvement and turn that against the people who are trying to push for change. So it's a dilemma. Because, on the other hand, can we just sit still? Can we not say anything?

And I think one of the disappointing things about President Bush's performance is that he hasn't been focused so much on individual cases and I think that many of the activists overseas and in China believe that if he had focused on individual cases for example, if he had brought up this blind lawyer, Mr. Chen, in public, or even in private, with the Chinese leadership, that could have an effect.

Now, some people say, "Oh, individuals. That's just individual cases. That's not going to have a long term effect on the country." But I think that these are the individuals who are changing the country.

For example, you have evidence of this in other countries as well. If we hadn't pushed for Nelson Mandela's release from prison in South Africa, maybe events would have turned out differently there as well. So these individuals can make a difference if we help them.

BILL MOYERS: The book is OUT OF MAO'S SHADOW. Philip Pan, thank you for being with me on the Journal.

PHILIP PAN: Thanks for having me.

BILL MOYERS: We try to deal with reality on the JOURNAL and all too often that means bad news. But there's a lot you can do to make a difference. On our website at you'll find out more about organizations that you can support that fight human rights abuses in China. There's also a map that will show you the location of food banks and other social services at which you can volunteer. Look at it at

I'm Bill Moyers. That's it for The JOURNAL. See you next week.

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