ANNOUNCER: IN THE LATTER YEARS OF THE 19th CENTURY AND EARLY YEARS OF THE 20th CENTURY, THE AMERICAN ECONOMY WAS PROFOUNDLY CHANGED FROM FARMING TO MANUFACTURING, FROM TRANSPORTATION BY HORSE TO THE AGE OF THE AUTOMOBILE, FROM THE FLICKERING LIGHTS OF CANDLES AND GAS LAMPS TO THE AGE OF ELECTRIC ILLUMINATION, FROM THE ANCIENT FORMS OF COMMUNICATION TO THE AGE OF THE TELEPHONE AND, WITH RADIO, THE DAWN OF MASS COMMUNICATION.

BUT WHILE ALMOST NO ONE WOULD ARGUE THAT THESE CHANGES DIDN'T IMPROVE THE QUALITY OF AMERICAN LIFE, THE TRANSITION DESTROYED COUNTLESS JOBS AND LIFESTYLES AND ALONG THE WAY PRODUCED AN ELITE CLASS IN THE NEW INDUSTRIES THOUGHT OF BY MANY AS ROBBER BARONS.

TODAY THE AMERICAN ECONOMY IS AGAIN UNDERGOING PROFOUND CHANGE PROPELLED BY VAST FORCES, INCLUDING THE GLOBALIZATION OF MANUFACTURING, THE WIDE-RANGING IMPACTS OF THE INTERNET, AND THE COMING OF ROBOTS CAPABLE OF DOING MANY JOBS.

LIKEWISE, THERE IS A WIDESPREAD SENSE IN THE UNITED STATES TODAY THAT WE ARE LIVING IN A PERIOD OF GROWING ECONOMIC INEQUALITY WITH THE FRUITS OF ECONOMIC CHANGE GOING IN A VASTLY DISPROPORTIONATE WAY ONLY TO THOSE AT THE VERY TOP.

ARE WE IN A NEW GILDED AGE?

AND WHAT LIES AHEAD?

THIS EPISODE OF "THE WHOLE TRUTH" WAS MADE POSSIBLE BY THE DORAN FAMILY FOUNDATION, AMETEK, AND BY... FOR HUNDREDS OF YEARS IN ENGLISH-SPEAKING COURTROOMS AROUND THE WORLD, PEOPLE HAVE SWORN AN OATH TO TELL NOT ONLY THE TRUTH BUT RATHER THE WHOLE TRUTH.

THE OATH REFLECTS THE WISDOM THAT FAILING TO TELL ALL OF A STORY CAN BE AS EFFECTIVE AS LYING IF YOUR GOAL IS TO MAKE THE FACTS SUPPORT YOUR POINT OF VIEW.

IN THE COURTROOM, THE SEARCH FOR TRUTH ALSO RELIES ON ADVOCATES ADVANCING FIRM, CONTRADICTORY ARGUMENTS AND DOING SO WITH DECORUM.

ALL OF THESE APPLY TO THE COURT OF PUBLIC OPINION, WHAT JOHN STUART MILL CALLED THE MARKETPLACE OF IDEAS.

THIS SERIES IS A PLACE IN WHICH THE COMPETING VOICES ON THE MOST IMPORTANT ISSUES OF OUR TIME ARE CHALLENGED AND SET INTO MEANINGFUL CONTEXT SO THAT VIEWERS LIKE YOU CAN DECIDE FOR THEMSELVES THE WHOLE TRUTH.

ON THIS EPISODE WE LOOK AT THE TRANSFORMATION UNDERWAY IN THE AMERICAN ECONOMY AND, IN PARTICULAR, ITS EFFECTS ON THE DISTRIBUTION OF WEALTH AND INCOME IN OUR SOCIETY.

AND WE ASK THE QUESTIONS, HAS THE UNITED STATES ENTERED A NEW GILDED AGE?

OR COULD IT BE A NEW AGE OF OPPORTUNITY?

AND TO THE EXTENT THAT WE FACE GROWING INEQUALITY, WHAT COULD AND SHOULD WE DO ABOUT IT?

HERE TO DISCUSS THESE ISSUES ARE MICHAEL TANNER, A CATO INSTITUTE SENIOR FELLOW, PROLIFIC AUTHOR AND SPEAKER, WHO HAS RECENTLY UNDERTAKEN A MAJOR PROJECT TO DEVELOP INNOVATIVE SOLUTIONS TO POVERTY AND INEQUALITY.

JOAN WALSH IS AN EDITOR/WRITER, NATIONAL AFFAIRS CORRESPONDENT FOR "THE NATION," AND A FREQUENT MSNBC CONTRIBUTOR.

ROBERT J. GORDON IS AN ECONOMIST, AUTHOR, AND THE STANLEY G. HARRIS PROFESSOR OF THE SOCIAL SCIENCES AT NORTHWESTERN UNIVERSITY.

JIMMY IUORIO IS A MANAGING DIRECTOR OF TJM INSTITUTIONAL SERVICES AND A CNBC CONTRIBUTOR.

WELL, OUR TOPIC TODAY IS, UH, INCOME INEQUALITY.

THAT IS, ARE WE LIVING IN A NEW GILDED AGE OR AN AGE OF OPPORTUNITY?

UH, THIS IS A QUESTION THAT IS ON, UH, MANY, MANY MINDS.

UH... AND IT'S BEEN A DEVELOPING QUESTION IN AMERICAN POLITICS FOR SOME TIME.

PRESIDENT OBAMA: THE AMERICAN PEOPLE'S FRUSTRATIONS WITH WASHINGTON ARE, UH, AT AN ALL-TIME HIGH.

THEIR FRUSTRATIONS ROOTED IN THEIR OWN DAILY BATTLES-- TO MAKE ENDS MEET, TO PAY FOR COLLEGE, BUY A HOME, SAVE FOR RETIREMENT.

IT'S ROOTED IN THE NAGGING SENSE THAT NO MATTER HOW HARD THEY WORK, THE DECK IS STACKED AGAINST THEM.

AND IT'S ROOTED IN THE FEAR THAT THEIR KIDS WON'T BE BETTER OFF THAN THEY WERE.

BUT THEY EXPERIENCE IN A VERY PERSONAL WAY THE RELENTLESS, DECADES-LONG TREND THAT I WANT TO SPEND SOME TIME TALKING ABOUT TODAY.

AND THAT IS A DANGEROUS AND GROWING INEQUALITY AND LACK OF UPWARD MOBILITY THAT HAS JEOPARDIZED MIDDLE-CLASS AMERICA'S BASIC BARGAIN-- THAT IF YOU WORK HARD, YOU HAVE A CHANCE TO GET AHEAD.

I BELIEVE THIS IS THE DEFINING CHALLENGE OF OUR TIME...

I'LL JUST START WITH A GENERAL QUESTION.

AND I'D LIKE TO GET EVERYBODY'S, UH, RESPONSE TO IT.

WHAT IS GOING ON HERE?

UH, NUMBER ONE, IS THIS A BAD THING?

WALSH: I THINK IT IS A BAD THING.

I THINK WE MADE SOME CONSCIOUS DECISIONS, UH, IN THE THIRTIES AND FORTIES AND FIFTIES TO, UH, REDUCE INCOME INEQUALITY TO BUILD A BROAD MIDDLE CLASS, TO USE THE GOVERNMENT TO DO THAT.

A LOT OF OTHER THINGS WERE FACTORS IN THERE.

UM, BUT I THINK WE CAN AGREE THAT INCOME INEQUALITY IS INCREASING; I THINK WE CAN AGREE THAT IT'S THE HIGHEST IN THE UNITED STATES OF ALL WEALTHY INDUSTRIALIZED NATIONS.

AND I THINK WE KNOW THAT IT'S...

IT'S ALSO ASSOCIATED WITH A LOT OF SOCIAL ILLS, LIKE, UH, TEEN PREGNANCY, INCARCERATION RATES, LOWER, UH--LOWER LIFE SPAN, INFANT MORTALITY.

UH...

SO THERE ARE A LOT OF REASONS TO BE CONCERNED ABOUT IT.

THE SOLUTIONS ARE, YOU KNOW, WHERE WE DIFFER, I THINK.

EISENHOWER: I'M NOT SURE, BUT WE'LL SEE.

MICHAEL?

WE ALREADY HAVE A VERY HIGH DEGREE OF REDISTRIBUTION IN THIS SOCIETY IN TERMS OF TAXING THE WEALTHY AT HIGHER RATES AND REDISTRIBUTING TO THE POOR IN TERMS OF LARGE NUMBERS OF SOCIAL PROGRAMS.

IF YOU TAKE ALL OF THOSE INTO ACCOUNT, IT DOES SHRINK THE DEGREE OF INEQUALITY A GREAT DEAL.

BUT BEYOND THAT, I REALLY DON'T CARE ABOUT INEQUALITY.

I CARE A GREAT DEAL ABOUT POVERTY.

AND POVERTY CREATES ALL THE QUEST--UH, PROBLEMS THAT YOU WERE JUST TALKING ABOUT.

BUT THERE'S NO RELATIONSHIP NECESSARILY BETWEEN INEQUALITY AND POVERTY.

IF EVERYBODY GETS RICHER, LOOK--IF YOU DOUBLED THE INCOME OF EVERYBODY IN AMERICA TOMORROW, FOR EXAMPLE, YOU WOULD RAISE A GREAT MANY PEOPLE OUT OF POVERTY, BUT YOU WOULDN'T DO ANYTHING ABOUT INEQUALITY.

AND HOW WOULD YOU DEFINE POVERTY?

WELL, I THI--I THINK POVERTY IS MORE THAN SIMPLE DESTITUTION.

I THINK THAT FOR A LONG TIME, WE SORT OF SAID, POVERTY WAS--YOU DIDN'T HAVE ENOUGH TO EAT OR DIDN'T HAVE A ROOF OVER YOUR HEAD.

BUT I THINK YOU CAN EVEN GO BACK TO ADAM SMITH TALKING ABOUT THE GOOD LINEN SHIRT THAT A PERSON, UH, WOULD BE POOR IF THEY DIDN'T HAVE A GOOD LINEN SHIRT BECAUSE THEY COULDN'T INTERACT IN SOCIETY, THEY COULDN'T BE PART OF THE ECONOMY, THEY COULDN'T FUNCTION FULLY IN SOCIETY.

AND I THINK WE CAN SAY THAT PEOPLE ARE POOR IF THEY LACK THE RESOURCES TO BE ABLE TO FULLY ENGAGE IN SOCIETY.

IUORIO: WELL, ONE THING I WOULD-- THERE IS A PROBLEM WITH WEALTH INEQUALITY WHEN IT IS EXAGGERATED EVEN IF THE-- THE LOWER RUNG IS DOING OK. AND THAT'S-- IT CREATES-- IT--IT SHAKES THE STABILITY OF A SOCIETY.

AND THERE'S BEEN PLENTY OF SOCIETIES HISTORICALLY THAT HAVE BEEN TUMBLED BY BIFURCATING WEALTH, RIGHT?

BUT WEALTH INEQUALITY BY ITSELF IS NOT JUST--IT-- IT'S A GOOD THING.

I MEAN, YOU CAN'T HAVE AN-- IF WE HAD AN ECONOMY WHERE EVERYBODY HAD THE SAME AMOUNT OF STUFF, YOU KNOW, CLEARLY, THAT WOULD NOT BE WHAT WE WERE LOOKING FOR.

WE'RE LOOKING FOR A DYNAMIC ECONOMY WHERE PEOPLE GO FROM LOWER RUNGS TO MIDDLE RUNGS TO HIGHER RUNGS.

WE WANT TO MAKE SURE THAT THE WHEELS ARE GREASED FOR THAT TO HAPPEN, OBVIOUSLY.

AND WE ARE IN A SITUATION WHERE WEALTH INEQUALITY HAS BECOME EXAGGERATED, AND THAT'S THE PROBLEM, NOT WEALTH INEQUALITY ITSELF.

BUT WHEN IT GETS TO A POINT THAT IT'S UNSUSTAINABLE, IT'S LIKE...

IT'S LIKE DRINKING WINE.

THREE GLASSES ARE FINE.

THE SECOND YOU HAVE THE FOURTH, FIFTH, GLASS, NOW ALL OF A SUDDEN, YOU'RE TALKING SOMETHING THAT WAS AN OK THING BECOMING A BAD THING.

THREE GLASSES MIGHT NOT BE FINE.

LET'S SAY 2 GLASSES WERE FINE.

TWO GLASSES WERE FINE.

NOW, 3 OR 4, ALL OF A SUDDEN, YOU HAVE AN ISSUE.

POVERTY IS SORT OF THE NATURAL STATE OF MAN, WHERE IN MANY WAYS WE'RE ALL SORT OF BORN INTO POVERTY-- ALL OF US--KIND OF NAKED AND POOR.

PROSPERITY IS SOMETHING THAT ACTUALLY HAS CAUSES.

AND, WELL, SO WE SHOULD BE FOCUSED ON WHAT ACTUALLY ENABLES PEOPLE TO GET OUT OF POVERTY, WHAT ENABLES PEOPLE TO BECOME PROSPEROUS.

AND WE KNOW THERE ARE CERTAIN THINGS-- FOR EXAMPLE, A GOOD EDUCATION--THAT-- THAT DOES THAT.

WE KNOW THAT GETTING A JOB DOES THAT.

LESS THAN 3% OF PEOPLE WHO WORK FULL-TIME LIVE BELOW THE POVERTY LEVEL.

WE KNOW THAT, UH, THINGS LIKE FAMILY FORMATION, UH, ARE IMPORTANT.

AND THAT LEADS INTO THINGS LIKE THE OVERCRIMINALIZATION WE HAVE IN THIS SOCIETY WHERE WE TREAT BLACK MEN AS CRIMINALS AND SO ON AND TAKE THEM OUT OF SOCIETY IN WAYS THAT--THAT MAKE THEM UNMARRIAGEABLE AND THEREFORE BREAK UP THE FAMILY.

ALL OF THOSE THINGS ARE THINGS THAT WE CAN WORK ON.

BUT THEY HAVE NOTHING TO DO WITH SIMPLY BRINGING DOWN THE RICH, KEEPING THE RICH POORER.

AT THE TOP, WE HAVE ABOUT HALF OF THE TOP 1% CONSISTS OF CEOs OF LARGE CORPORATIONS WHO USED TO BE PAID ROUGHLY 25 TIMES THE AMOUNT OF THE AVERAGE WORKER AND NOW ARE PAID 300 OR 400 TIMES AS MUCH.

AND MUCH OF THAT EXTRA PAY IS COMING IN THE FORM OF STOCK OPTIONS.

UH, WE HAVE A LOT OF OTHER PEOPLE IN THE TOP 1% WHO WE ALL KNOW-- THEY'RE SPORTS STARS, THEY'RE ENTERTAINMENT STARS.

AND FINANCIAL TRADERS ARE ALSO UP THERE IN THE TOP 1%.

THE CAUSES OF GROWING INEQUALITY AT THE BOTTOM ARE QUITE DIFFERENT.

THEY INVOLVE WAGE STAGNATION AT THE BOTTOM.

THEY INVOLVE A DISAPPEARANCE OF HIGH-PAYING BLUE-COLLAR JOBS DUE TO GLOBALIZATION, DUE TO IMPORTS FROM CHINA, DUE TO THE WEAKENING AND DISAPPEARANCE OF LABOR UNIONS, AND THE EROSION OF THE MINIMUM WAGE.

SO WE REALLY HAVE QUITE A DIFFERENT STORY GOING ON AT THE TOP AND THE BOTTOM.

WAS THE--IN FACT, IT RELATES TO WHAT YOU SAID.

WAS THE MIDDLE CLASS A KIND OF CREATION, UH, IN THE MIDDLE, UH, 20th CENTURY, AND, UH... SOMETHING THAT, UM, IS AN EXCEPTION RATHER THAN A RULE?

OR WOULD YOU SAY, UH, THE MIDDLE CLASS HAS BEEN, UH, PART OF THE AMERICAN OUTLOOK FROM--FROM THE VERY BEGINNING?

WE CAME OUT OF WORLD WAR II WITH AN ENORMOUS INCREASE IN THE AVERAGE LEVEL OF INCOMES THAT ALLOWED ORDINARY PEOPLE WITH ORDINARY LEVELS OF SKILLS TO EARN ENOUGH MONEY TO HAVE A CAR--OR 2 CARS-- TO OWN THEIR RANCH HOUSE OUT IN THE SUBURBS.

AND AMERICA GOT THERE FIRST WITH THAT MIDDLE-CLASS STANDARD OF LIVING.

AND AFTER ABOUT 1975, UH, THINGS BEGAN TO MOVE APART AGAIN WITH THE BEGINNING OF THIS STAGNATION, PARTICULARLY FOR BLUE-COLLAR MEN WITH THEIR INCOMES NOT INCREASING AND THIS RISE THAT WE'VE BEEN TALKING ABOUT AT THE VERY TOP THAT WENT ON AND ON AND HAS GATHERED STEAM THROUGHOUT THE NINETIES AND THE LAST DECADE.

EISENHOWER: AND YOU SAY THIS IS A... A QUESTION OF CHOICE, BY--BY CONSCIOUS DECISION.

WHAT DO YOU MEAN, JOAN?

WALSH: I THINK THERE WAS A GREAT FEAR IN THE WAKE OF THE GREAT DEPRESSION AS WELL AS WORLD WAR II.

THERE WAS A FEAR OF, UH, COMMUNISM.

THERE WAS A FEAR OF FASCISM.

THERE WAS A BELIEF THAT HAVING A STRONG-- A WIDER, STRONGER MIDDLE WAS BETTER FOR POLITICAL STABILITY.

IT WAS GOOD FOR CORPORATIONS.

I MEAN, PROFITS DID GO UP.

UM, AND I THINK GOVERNMENT, YOU KNOW, WHEN WE TALK ABOUT PEOPLE MOVING TO THE SUBURBS, UH, GOVERNMENT BUILT THOSE ROADS.

WE BUILT THE EISENHOWER INTERSTATE HIGHWAY SYSTEM.

UH, WE--WE MADE A-- WE INVESTED IN PUBLIC UNIVERSITIES.

WE DID RAISE THE TOP MARGINAL TAX RATES TO--TO FINANCE SOME OF IT.

MICHAEL...MI-- LET'S NOT--LET'S NOT OVERSTATE THIS AS A GOLDEN AGE, HOWEVER.

THIS WAS AN AREA IN WHICH WE PROSPERED BECAUSE MUCH OF THE REST OF THE WORLD HAD BEEN REDUCED TO RUBBLE.

IT WAS AN AGE IN WHICH WE KEPT LARGE PORTIONS OF THE POPULATION OUT OF THE WORKFORCE--WOMEN, AFRICAN AMERICANS, AND OTHERS, AND THEREFORE WERE ABLE TO CONCENTRATE WHAT PROSPERITY WE HAD IN TERMS OF WHITE MEN ESSENTIALLY IN THE POPULATION.

AND IT WAS AN AGE IN WHICH THERE WAS STILL, SORT OF, VERY--A LOT OF DESTITUTION OUT THERE.

YOU GO AROUND TO THE EARLY 1960s, AND YOU HAD 1/3 OF AMERICAN POOR WITHOUT INDOOR PLUMBING OR ELECTRICITY WASN'T PROVIDED AND SO ON... "THE OTHER AMERICA," IN MICHAEL HARRINGTON'S PHRASE.

EXACTLY.

SO THIS WAS NOT QUITE THE GOLDEN AGE I THINK IT'S OFTEN PORTRAYED AS.

EISENHOWER: DO WE HAVE-- DO WE HAVE A POLICY CHOICE HERE?

IUORIO: DO WE HAVE A POLICY CHOICE HERE?

WHAT I'M HERE, REALLY, TO TALK ABOUT IS 30 YEARS OF A WEAK CURRENCY BASED ON INTEREST RATES THAT ARE HELD WAY LOWER THAN THEY SHOULD BE, IS WHAT'S TAKING MONEY OUT OF POOR PEOPLE'S POCKETS AND PUTTING IT INTO THE--INTO THE UPPER FIFTH, WE'LL CALL IT.

I MEAN, UPPER 5%.

THINK OF IT THIS WAY, EVERY CENTRAL BANK, PARTICULARLY THE BIG 3 CENTRAL BANKS RIGHT NOW-- JAPAN, EUROPE, AND THE FED--ARE JUST DUMPING MONEY INTO THE SYSTEM TO TRY TO SOLVE THEIR ECONOMIC WOES.

WELL, THAT MONEY'S GOING TO END UP SOMEWHERE.

AND IT ALWAYS GETS ATTRACTED TO WHERE IT'S--TO--ONE--WHERE IT'S TREATED BEST AND--TWO--IT GOES LIKE-- LIKES ITSELF.

SO MONEY GOES TO MONEY.

SO THE RICH KEEP GETTING RICHER AND THE MIDDLE-- THE MIDDLE AND THE LOWER END ARE JUST NOT PARTICIPATING IN THIS INJECTION OF MONEY.

HOW ARE WE, IN FACT, LIVING?

I WALK DOWN THE STREETS OF PHILADELPHIA, AND I SEE HAPPY, PRETTY PROSPEROUS PEOPLE.

GORDON: JUST THINK ABOUT THE TREMENDOUS CHANGE IN THE STANDARD OF LIFE BETWEEN 1870 AND 1970.

THE INVENTION OF ELECTRICITY, THE I--THE INVENTION OF THE ELEVATOR MAKING POSSIBLE THE VERTICAL CITY, UH, ELECTRIC HAND TOOLS, ELECTRIC MACHINE TOOLS, AIR CONDITIONING.

IN TRANSPORTATION, THE INTERNAL COMBUSTION ENGINE, CARS REPLACING HORSES, THE ENORMOUS IMPROVEMENT IN THE STANDARD OF LIVING OF NOT HAVING HORSE WASTE ALL OVER THE STREETS THAT HAD TO BE PICKED UP BY PEOPLE WHO HAD VERY LOUSY JOBS.

THE LIBERATION OF WOMEN, HOUSEHOLD APPLIANCES.

ALL THOSE THINGS CHANGED RADICALLY... JUST AN OLD INVENTION CALLED RUNNING WATER.

THAT MEANT THAT NO LONGER WERE WOMEN IN EVERY HOUSEHOLD SADDLED WITH THE INCREDIBLE TASK OF CARRYING LITERALLY TONS OF WATER INTO THE HOUSE AND OUT OF THE HOUSE.

THESE CHANGES OVER WHAT I CALL THE SPECIAL CENTURY BEGAN TO, UH, REACH THEIR ULTIMATE LEVEL, UH, BY ABOUT 1970.

BY THEN, WE HAD MOVED FROM A RURAL TO AN URBAN SOCIETY.

YOU CAN ONLY DO THAT ONCE.

WHAT'S HAPPENED IN THE LAST 40 OR 50 YEARS IS WE'VE HAD A DIGITAL REVOLUTION INVOLVING COMPUTERS AND COMMUNICATION.

THAT IS REVOLUTIONARY IN ITS OWN WAY, BUT IT ONLY AFFECTS A SMALL SLICE OF LIFE COMPARED TO THIS BIG, WIDE SLICE OF EVERY ASPECT OF LIFE THAT WAS TRANSFORMED BEFORE 1970.

EISENHOWER: UH, SO, WHAT IS THE NATURE OF THIS ISSUE?

IS THIS--IS THIS STATUS?

IS THIS, UH... IS THIS A RELATIVE CONCEPT THAT WE'RE TALKING ABOUT HERE?

AND--AND DOES THAT, UH, DOES THAT CAUSE A POTENTIAL POLITICAL PROBLEM?

NO.

I THINK IT'S BUILT IN MORE TO A SENSE OF FAIRNESS, UH, THAN IT IS.

'CAUSE I THINK IN TERMS OF MATERIAL GOODS AND SO ON, WE ARE ACTUALLY LIVING BETTER, UH, THAN WE-- THAN WE HAVE BEFORE.

OUR LIFE EXPECTANCIES ARE GENERALLY BETTER AND SO ON.

WE--OUR HEALTH IS BETTER.

UH, BUT I THINK THERE'S A CONCERN ABOUT FAIRNESS.

AND IT--IT SORT OF COMPETES WITH THE AMERICAN IDEA OF A MERITOCRACY.

WE WANT PEOPLE TO RISE TO THE TOP AND TO GET ALL THAT THEY EARN ON THE BASIS OF WHAT THEY'VE ACHIEVED AND WHAT THEIR SKILLS ARE AND THINGS OF THAT NATURE.

BUT WE ALSO SEE PEOPLE WE THINK RISE TO THE TOP WHO DON'T DESERVE IT.

AND THAT--THAT'S THE BANKS WHO ARE BAILED OUT, FOR EXAMPLE, UNDER TARP AND THE PEOPLE WHO GET SPECIAL DEALS, AND, SORT OF, THE CRONY CAPITALISTS THAT'S OUT THERE WHO'S LIVING OFF OF SPECIAL CONTRACTS FROM THE GOVERNMENT AS OPPOSED TO THE PERSON WHO INVENTED A NEW COMPUTER OR SOMETHING AND IS, YOU KNOW-- THE STEVE JOBS.

WE'RE HAPPY THAT STEVE JOBS IS RICH, OR WAS RICH.

UH, BUT WE DON'T NECESSARILY THINK THAT SOMEBODY WHO, YOU KNOW, LOBBIED WASHINGTON AND GOT A SPECIAL TAX BREAK THAT JUST FIT FOR HIM AND THEREFORE GOT RICH OFF OF THAT SHOULD BE GETTING AHEAD.

GORDON: I--I DON'T LIKE THIS, UH, ASSUMPTION THAT EVERYTHING IS GETTING BETTER.

WE HAVE A...EROSION OF MARRIAGE IN THIS ECONOMY.

WE HAVE--AN EVER-GROWING PERCENTAGE OF CHILDREN ARE GROWING UP WITH A SINGLE PARENT INSTEAD OF TWO PARENTS.

UH, WE HAVE A SHORTAGE OF...OF MEN WHO ARE MAKING ENOUGH MONEY TO MAKE THEM ATTRACTIVE MARRIAGE PARTNERS.

UH... WE HAVE--60% OF COLLEGE STUDENTS ARE FEMALE NOW, WHICH IS WONDERFUL FOR THE FEMALES, BUT IT LEADS TO AN IMBALANCE.

AND WE'VE HAD NO IMPROVEMENT IN THE COLLEGE COMPLETION RATE OF AMERICAN MALES FOR MORE THAN 25 YEARS.

IN THE BOTTOM 1/3 OF THE WHITE POPULATION, UH, AS CLASSIFIED BY EDUCATION AND INCOME, UH, ONLY ABOUT 40% OF CHILDREN ARE GROWING UP WITH BOTH BIOLOGICAL PARENTS IN THE HOUSEHOLD.

THAT'S DOWN FROM ABOUT 90% 50 YEARS AGO.

THERE--I MEAN, THERE'S A DEBATE, I THINK.

THERE'S A CHICKEN AND EGG THING WHERE PEOPLE ON THE RIGHT SAY POVERTY HAS RISEN BECAUSE MARRIAGE HAS DISAPPEARED.

AND PEOPLE ON THE LEFT SAY MARRIAGE HAS DISAPPEARED BECAUSE POVERTY HAS RISEN AND, YOU KNOW, THIS ISSUE AROUND "MARRIAGEABLE," JU--YOU KNOW, MEN BEING EMPLOYED, BE--BEING GOOD PARTNERS TO TAKE A RISK ON.

UH, AND THE LITERATURE ON IT IS FASCINATING, AND IT'S SOBERING.

SOMETHING LARGER HAS GOT TO BE AT WORK HERE.

I MEAN, THE SHEER DIMENSIONS OF THIS CHANGE.

THIS HAS GOT TO BE ONE OF THE MOST RADICAL SOCIAL EXPERIMENTS IN ALL OF HISTORY.

THIS IS, UH, PEOPLE LIVING WITHOUT SPOUSES.

TANNER: TO SOME DEGREE, IT, YOU KNOW, SOME OF THIS IS A GOOD THING TO SOME DEGREE.

I MEAN, UH, THE LARGEST SINGLE FACTOR IN THE--I MEAN, I DO THINK THAT SOCIAL WELFARE POLICY HAS PLAYED INTO IT.

BUT THE LARGEST SINGLE FACTOR WAS THE PILL.

I MEAN, THE FACT IS THAT FOR THE FIRST TIME WOMEN COULD HAVE SEX WITHOUT HAVING THE FEAR OF CHILDBEARING, UH, PUSHED UPON THEM.

AND THAT'S--THAT'S A GOOD THING GENERALLY.

BUT IT HAS CONTRIBUTED TO THE DELINKING OF SORT OF CHILDBEARING AND MARRIAGE, UH, IN SOCIETY.

AND THAT'S NEVER GOING TO CHANGE.

RIGHT.

AND THE DELINKING OF WOMEN, UH, YOU KNOW, BEING DEPENDENT ON HUSBANDS.

SURE.

YEAH...SURE.

YOU KNOW, A LOT OF THIS IS REALLY THE...

THE GREATER AUTONOMY OF WOMEN, AND WE DON'T KNOW HOW TO RECKON WITH IT BECAUSE WOMEN ARE LEAVING BAD MARRIAGES OR THEY'RE NOT FORMING MEDIOCRE MARRIAGES.

IUORIO: AND WEALTH EQUALITY.

TOO.

YOU KNOW, WOMEN, THE EDUCATION RATES, WOMEN--THE SUCCESS RATE IN BUSINESS.

AND THIS IS A-- A GOOD PART OF THE WEALTH INEQUALITY DEBATE BECAUSE NO SUCCESSFUL WOMAN MARRIES LOSERS.

THERE--THERE--USED TO HAVE A MAN WHO MIGHT MARRY, UH, A WOMAN OF--OF A DIFFERENT SOCIAL CLASS.

THERE WASN'T AS MUCH GAP BETWEEN THE CLASSES.

AND NOW WHEN YOU HAVE COLLEGE EDUCATED PEOPLE ONLY MARRYING OTHER COLLEGE...EDUCATED PEOPLE, YOU'RE CONCENTRATING THOSE ADVANTAGES.

SO I'M NOT ADVOCATING AGAINST THAT.

GORDON: WELL, AND THAT BRINGS US BACK TO THE FACT THAT 60% OF COLLEGE STUDENTS ARE FEMALE.

SO THERE'S A GREAT SHORTAGE OF COLLEGE EDUCATED MEN TO SERVE AS HUSBANDS TO JOIN TOGETHER WITH COLLEGE EDUCATED WOMEN.

WALSH: RIGHT.

AND THAT'S SOMETHING THAT IS REALLY BEYOND THE REACH OF GOVERNMENT POLICY.

WHY ARE WE LOOKING TO GOVERNMENT TO SOLVE THIS-- THESE--THESE PROBLEMS?

MOST OF WHAT GOVERNMENT-- MOST OF THE PROBLEMS WE HAVE HAVE BEEN CAUSED BY SOME GOVERNMENT INCORRECT DECISION.

I THINK, YOU KNOW, INCOME INEQUALITY IS-- KIND--IS KIND OF A DIFFICULT TERM BECAUSE NONE OF US HERE, NOT EVEN BERNIE SANDERS, IS TALKING ABOUT ABSOLUTE INCOME EQUALITY.

THAT'S NOT THE END.

IF WE FLIP IT AROUND, THAT'S NOT WHAT ANYONE'S ASKING FOR.

WE'VE NEVER HAD THAT.

I DON'T THINK WE WANT IT.

WE WANT INCENTIVES.

BUT--BUT THE PROBLEM NOW, I THINK, IS A QUESTION OF EQUITY.

I THINK YOU REALLY-- YOU REALLY HAVE TO ASK, IF YOU LOOK ACROSS SOCIETY, IF YOU LOOK AT SOCIAL GROUPS, IF YOU LOOK AT RACIAL GROUPS, IF YOU LOOK AT CLASS GROUPS, ARE THEY SHARING IN THE BROAD PROSPERITY?

AND THE ANSWER IS NO.

AND I THINK THERE'S A-- THERE'S A GROWING BODY OF EVIDENCE THAT INEQUALITY IS ACTUALLY BAD FOR GROWTH.

CORPORATIONS.

WE--WE GAVE THEM CHEAP MONEY, AND WHAT DID THEY DO WITH IT?

THEY BORROWED AND BOUGHT THEIR SHARE PRICE BACK, RIGHT, AND CONCENTRATED WEALTH AT THE TOP.

SO THE QUESTION BECOMES, WHY AREN'T COMPANIES EXPANDING AND EXPANDING HERE?

WHY IS $3 TRILLION BEING HELD WHERE IT'S TREATED BETTER IN DIFFERENT COUNTRIES?

SO EVERY TIME THE GOVERNMENT LOOKS AT IT, THEY SAY TO THEMSELVES, "WELL, "WE NEED TO FORCE THESE PEOPLE TO MANUFACTURE..." OR, "WE NEED TO FORCE..." HOW ABOUT A CARROT-- TRYING A CARROT INSTEAD OF THE STICK, UH, WITH CORPORATIONS AND PROVIDING, LIKE, A REASONABLE TAX INCENTIVE TO BRING MONEY BACK, A REASONABLE TAX INCENTIVE TO MANUFACTURE HERE, TO DO THINGS HERE?

BUT I THINK, EVEN AS WE HEARD EARLIER, UH, TALKED ABOUT THE FACT THAT CEOs MAKE MORE THAN THEIR EMPLOYEES--ONE OF THE REASONS FOR THIS WAS THE RUN OF ANTI-TAKEOVER LEGISLATION THAT WE PASSED BECAUSE WE WERE MAD AT CARL ICAHN AND THE-- WE HAD THE BARBARIANS AT THE GATES AND SO ON.

AND SO WE WERE GOING TO MAKE IT HARDER FOR HOSTILE TAKEOVERS.

SO WE PASSED A BUNCH OF LEGISLATION THAT NOW-- SO NOW IF YOU HAVE A COMPANY AND YOU WASTE YOUR COMPANY'S MONEY OR YOU HIRE--PAY TOO MUCH TO A CEO OR YOU RUN YOUR COMPANY BADLY, PEOPLE FROM THE OUTSIDE CAN'T COME IN AS EASILY AND--AND TAKE IT OVER.

SO WE'VE DONE THINGS TO MAKE IT EASIER...

IT'S MORE INCESTUOUS THAN THE BOARDS... GORDON: WE HAVE A WAVE OF MERGERS GOING ON.

WE HAVE A... AN ECONOMY WHERE THERE ARE SO FEW ATTRACTIVE INVESTMENT OPPORTUNITIES DUE TO THIS PHASING OUT OF INNOVATION, AS I CALL IT, THAT, UH, THAT WE HAVE COMPANIES INSTEAD OF INVESTING IN PLANTS AND EQUIPMENT ARE BUYING BACK THEIR OWN SHARES.

THEY'RE TRYING TO ENRICH THEIR... WELL, THAT'S BECAUSE YOU CAN BORROW FOR ZERO.

THAT'S PART OF THE EASY MONEY PROBLEM.

IUORIO: YOU GUYS, WE'RE DANCING AROUND THE GREATER ISSUE HERE.

AND YOU JUST SAID LACK OF INVESTMENT OPPORTUNITIES.

LACK OF INVESTMENT OPPORTUNITIES IN THE U.S. TREASURY MARKET, THAT WAS A STATED GOAL OF THE FED AT SOME POINT IN TIME-- TO TRY TO PUSH MONEY FURTHER OUT THE RISK SPECTRUM.

AND WHEN THEY DO THAT OVER PERIODS-- THE BUBBLE-BUST ECONOMY.

YOU GUYS HIT UPON, UH, CEOs.

CEOs ARE PAID BASED ON ASSET PRICES AND STOCK OPTIONS.

ASSET PRICES AND STOCK OPTIONS ARE DOING WHAT THEY'RE DOING BECAUSE OF THE BUBBLE-BUST ECONOMIES, UH, CREATED BY ZERO RATES.

IT HAPPENED IN THE DOT-COM.

IT HAPPENED IN REAL ESTATE, AND IT'S HAPPENING SOMEWHERE NOW.

AND IF I COULD--IF I COULD PINPOINT IT, I'D BE A BILLIONAIRE.

BUT THIS IS WHAT'S HAPPENING.

AND WHAT REALLY IS HAPPENING, WE'RE TALKING ABOUT THE MIDDLE CLASS, AFTER 10 YEARS OF LOW RATES WHERE THEY CAN'T GET AN INVESTMENT-- A GOOD RETURN ON ANYTHING ANYWHERE, THEY START GETTING MORE AND MORE RISKY.

THEY INVEST IN THINGS THEY SHOULDN'T.

AND THE FIRST DOWNTURN IN THE ECONOMY, THOSE WHO LEVERAGED UP ON THINGS OR TOOK THE WRONG, UH, BET AND INVESTED THEIR MONEY, GET WIPED DOWN TO THE BOTTOM.

EISENHOWER: WELL, WE SEEM TO HAVE A CONSENSUS THAT MAYBE THE MIDDLE IS NOT AS LARGE AS IT WAS.

THIS IS AN ANCIENT IDEA.

IT GOES BACK TO ARISTOTLE'S "POLITICS," THAT, UH, A GOVERNMENT BASED ON THE MIDDLE SORT, UH, IS A GOOD ONE.

SO WE SORT OF MISS THAT.

UH, ARE--ARE WE IN A GILDED AGE?

OR IS THIS AN AGE OF OPPORTUNITY?

AND, UH, JUST, A POSITIVE/NEGATIVE... HOW IS THIS GOING TO--HOW IS THIS GOING TO PLAY OUT?

LET'S, FIRST OF ALL, NOTE THAT THE GILDED AGE ACTUALLY WASN'T SO BAD.

IT WAS ACTUALLY A PERIOD OF WAGE GROWTH.

IT WAS A PERIOD OF EXPANDED BUSINESSES.

IT WAS EXPANDED PROSPERITY GENERALLY AMONG THE WHOLE-- THE ENTIRE POPULATION.

AND SO WE SORT OF LOOK AT THE INEQUALITY OF IT, BUT WE DON'T LOOK AT THE OTHER GOOD THINGS THAT WERE HAPPENING DURING THAT PERIOD.

I THINK THE LARGER QUESTION HERE IS, IS THE SOLUTION TO INEQUALITY, OR MORE SPECIFICALLY, THE SOLUTION TO POVERTY, WHICH I THINK IS A MUCH BIGGER ISSUE, SOMETHING ABOUT GOVERNMENT DOING MORE, OR MIGHT IT BE, ACTUALLY, GOVERNMENT DOING LESS?

LOCKING UP LESS PEOPLE, PUNISHING BUSINESSES LESS, GETTING IN THE WAY OF PROSPERITY LESS?

I--I THINK, YOU KNOW, I THINK WE TRIED THAT IN THE GILDED AGE.

AND--AND WE DID HAVE, YOU KNOW, RISING PROSPERITY.

BUT WE ALSO HAD A LOT OF POVERTY AT THE BOTTOM.

WE HAD CHILD LABOR.

WE HAD WOMEN, LOCKED--YOU KNOW, LOCKED IN, UH, SWEATSHOPS THAT BURNED DOWN.

UH, WE HAD--WE HAD A HOST OF--OF ILLS THAT LED TO REGULATION, THAT LED TO CHILD LABOR RESTRICTIONS, THAT LED TO HEALTH AND SAFETY REGULATIONS.

I MEAN, WE--THERE'S SOME ARGUMENT THAT WE'VE GONE TOO FAR ON REGULATION, BUT THERE WAS A REASON FOR THOSE REGULATIONS.

I DON'T SEE US GETTING BEYOND THIS IN A PROFOUNDLY UNEQUAL SOCIETY, UH, WHERE SO MUCH IS DIVIDED BY RACE.

QUITE FRANKLY, I THINK THERE IS A ROLE FOR GOVERNMENT.

I DON'T THINK THE MARKET CAN HANDLE IT.

IT DIDN'T HANDLE IT IN THE GILDED AGE.

WE NEED A GOVERNMENT THAT WORKS WITH THE BUSINESSES TO HELP THEM CREATE.

IF THAT HAPPENS, THEN--AND THIS IS NOT JUST MY WORDS.

SEVERAL DIFFERENT FED REPRESENTATIVES, FED PRESIDENTS HAVE SAID RATES HAVE BEEN KEPT, UM, INORGANICALLY LOW FOR LONG PERIODS OF TIME TO BE A COUNTERBALANCE TO SOME CRUMMY ECONOMIC POLICY.

AND PART OF IT-- THEY DIDN'T SAY "CRUMMY" BY THE WAY.

I'M PARAPHRASING.

IF--IF EVERYTHING IS ALLOWED TO WORK PROPERLY, THEN PEOPLE WON'T BE FORCED TO TAKE RISK, UM, COMPANIES WON'T BE, YOU KNOW, BUYING BACK THEIR SHARES.

THEY'LL BE--THEY'LL BE BUILDING PLANTS AND EMPLOYING PEOPLE.

AND IT'S ALL A FUNCTION OF--OF GOVERNMENT WORKING WITH THE COMPANY.

I THINK WE'RE GOING TO BE TALKING ABOUT THIS ISSUE FOR MANY YEARS TO COME.

AND I TRULY--WE ALL TRULY APPRECIATE, UH, YOUR ABILITY, YOUR WILLINGNESS TO COME TODAY AND SHARE YOUR INSIGHTS.

THANK YOU VERY MUCH.

WALSH AND GORDON: THANK YOU.

ALL RIGHT.

THE IDEA THAT AMERICA IS BECOMING MORE AND MORE A LAND OF ECONOMIC INEQUALITY WITH A DECLINING MIDDLE CLASS HAS BECOME A STAPLE OF OUR POLITICS.

IN AN AGE IN WHICH THE RIGHT AND LEFT AGREE ON SO LITTLE, BOTH SEEM TO START THEIR DISCUSSIONS OF ECONOMIC POLICY FROM THE PREMISE OF ECONOMIC INEQUALITY AS A REALITY AND A PROBLEM HOWEVER DRAMATICALLY DIFFERENT THE TWO SIDES STILL RESPOND IN THEIR PRESCRIPTIONS FOR PUBLIC POLICY ON THE ISSUE.

BUT AS OUR DISCUSSION ON THIS EPISODE OF "THE WHOLE TRUTH" HAS SHOWN, THESE ARE COMPLICATED MATTERS.

INEQUALITY OF RESULTS IS NOT IDENTICAL TO INEQUALITY OF OPPORTUNITY.

AND THE INEQUALITY OF THE DISTRIBUTION OF BENEFITS DOES NOT NECESSARILY MEAN THAT ANY SECTOR OF THE SOCIETY IS BEING TREATED UNFAIRLY.

IS OUR MIDDLE CLASS REALLY DISAPPEARING WHEN THE EVIDENCE OF OUR OWN EYES SUGGESTS THAT THE AMERICAN MIDDLE CLASS' STANDARD OF LIVING REMAINS THE HIGHEST IT HAS EVER BEEN, BOTH AT HOME AND COMPARED TO THE WORLD?

LIKEWISE, IT HAS NEVER BEEN EASIER FOR ENTREPRENEURS AND INNOVATORS TO CREATE BILLION-DOLLAR BUSINESSES AND GET VERY RICH DOING SO.

BUT THOSE FORTUNES ARE THE PRODUCT OF DISRUPTIVE CHANGES THAT BRING IMPROVEMENTS TO THE LIVES OF MANY WHILE PERHAPS BRINGING LOSSES TO OTHERS.

WE DON'T KNOW WHAT THE FUTURE HOLDS, EXCEPT THE CERTAINTY OF ACCELERATING CHANGE PROPELLED BY TECHNOLOGY AND REQUIRING BOTH SOCIAL AND POLITICAL RESPONSES.

IN THE FINAL ANALYSIS, AMERICA MUST SEE ITSELF CLEARLY RATHER THAN THROUGH ANY POLITICAL NARRATIVE WHETHER OF THE RIGHT OR THE LEFT IN ORDER TO MAKE SOUND POLICY REGARDING THE FUTURE OF OUR ECONOMY.

WHAT SEEMS TO ME TO BE THE WHOLE TRUTH OF THE MATTER IS THAT WHETHER WE ARE MOVING INTO A GILDED AGE OR AN UNPRECEDENTED AGE OF OPPORTUNITY, IT REMAINS TO BE SEEN.

BUT THE PUBLIC POLICY WILL BE FOCUSED ON THIS ISSUE FOR MANY YEARS TO COME.

I'M DAVID EISENHOWER.

THANK YOU FOR WATCHING.

ANNOUNCER: THIS EPISODE OF "THE WHOLE TRUTH" WAS MADE POSSIBLE BY THE DORAN FAMILY FOUNDATION, AMETEK, AND BY... AND BY CONTRIBUTIONS TO YOUR PBS STATION BY VIEWERS LIKE YOU.

THANK YOU.