Inequality for All Page #3

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Now, see, this box

is really important.

I travel not only

with my MINI Cooper

but with my box.

Hello, George.

How are you?

You are so kind

to bring the box.

We have one for you too.

It's the same room and...

In recent years,

I've discovered

that I actually have

a very, very rare

genetic condition.

It's Fairbanks Syndrome

that is responsible

for me being very short.

- Hey, Bob, let me carry that.

- No, no, no, that's fine.

My parents were normal size.

My grandmother

always said to me,

"Don't worry,"

'cause when I hit

about 10 or 11 or 12,

I'm gonna,

you know,

have a real growth spurt.

And then I got to be

about 10, 11,

and nothing happened, you know?

Right up this way to the right.

Right this way.

Yup, behind you.

I grew up in the shadow

of World War II.

My father was in the war.

We were middle-class.

My father sold dresses.

My mother helped in the shop.

My first job in Washington

was working as a summer intern

for Robert Kennedy.

It was a time

when there were kind of giants.

Robert F. Kennedy,

Martin Luther King,

they were all

trying to change society.

There was a sense

of possibility.

It kind of turned me on

to politics.

A few years later, I was picked

to be a Rhodes Scholar.

In those days,

all the Rhodes Scholars

who were selected

took a boat to England.

The problem was, you know,

when you go over there,

the Atlantic Ocean

is pretty rough.

You know, I and most

of the other Rhodes Scholars

were sick,

and I went down to my cabin.

You know,

I thought I was gonna die.

And then there was a knock

on the door,

and this fellow was there,

this kind of tall,

gangly Southerner,

and he had chicken soup

in one hand

and crackers in the other,

and he said, "I hear

you aren't feeling too well.

"I thought these might help.

My name is Bill Clinton."

At Oxford,

we were at the same college.

We kept in touch.

At Oxford,

I studied mostly economics

and philosophy.

But those experiences

really were a study for me

of the rules by which

markets are organized.

And this is an important point,

and it's one

that's very often lost,

but it was the focus

of my attention.

You see, there's no such thing

as a perfectly free market

anywhere.

Government sets the rules

by which the market functions.

All of these rules

are necessary

in order to construct

a free market.

The real question is,

who do these rules benefit

and who do they hurt?

And in the last 30 years,

as the structure of the economy

began to shift,

many of the rules

governing our market

began to shift as well.

Today we're going

to try to explain

the mystery of why inequality

has been widening.

Remember, the economy is growing

all of this time.

The economy is...

The economy continues to grow.

Look, here is

gross domestic product growth

from 1929 to 2011.

The economy overall

has done extremely well,

and productivity

keeps on increasing.

We are producing

more and more and more

and more and more value.

That's a big, big

success story.

But here is the problem.

Here's the puzzle.

Because if you look

at the average hourly earnings

of production workers,

the average hourly earning

continued to rise

until the late 1970s,

and then something happened,

flattening wages.

Look at the gap.

Something happened

in the late 1970s.

Something happened

in the late 1970s, folks.

In the late 1970s,

I was at

the Federal Trade Commission.

I was looking

at a lot of studies

about the direction

that the economy was going in.

More of American manufacturing

was beginning to move abroad.

There was the beginnings

of a technological revolution.

Financial markets were becoming

a little bit more powerful.

There was a move to deregulate.

Well, you connect the dots,

and all of these

begin to look as if

they're connected somehow

to this widening inequality.

For example, we knew that

labor unions were declining.

And that decline mirrored

almost exactly

the decline

in the middle class' share

of national income.

The hard part is stepping back

and seeing the big picture.

Many people, even to this day,

say that the decline of unions

really was attributable

to Ronald Reagan taking on

the air traffic controllers.

Strike, strike, strike,

strike, strike, strike...

I must tell those who failed

to report for duty this morning,

they have forfeited their jobs

and will be terminated.

There's no question

that beginning in the late '70s

but also after Reagan fired

the air traffic controllers,

there was a major assault

on unions.

Employers did try to prevent

unions from being formed

much more aggressively

than before...

- I'll go.

- You don't have to hang on to me.

And employers fought

to bust unions

that were already there.

But maybe they were doing so

because they felt they had to

in order to maintain

their competitiveness

given so many other companies

that were nonunion

in the United States

and also many companies abroad.

The major underlying issue

was two interrelated things:

Globalization and technology.

I mean, you hear the word

"globalization"

over and over and over again.

Globalization, globalization,

globalization.

Rarely has a word gone

so directly

from obscurity

to meaninglessness

without any intervening period

of coherence.

Can anybody lend me

their iPhone for a moment?

Anybody have one that...

great.

Thank you.

I don't have one,

and I've really wanted

to have one.

Where do most of your dollars go

when you buy an iPhone?

What do you think?

Let's go.

Let's do the bidding.

A little over 700 of you

have these clickers,

which is great.

You say mostly

to the United States,

some of you say to China,

and then some of you say...

a few of you say Japan.

11 of you think Germany.

Well, here is where

your dollars go.

Most of your dollars

are going to Japan.

Some of your dollars

are going to Germany.

In fact, Germany

is the biggest...

is the second-biggest one.

South Korea's the third,

and here,

6% of your dollars

are going to the United States,

and only 3.6% of your dollars

are going to China.

Now, it's assembled in China.

Do you get this?

It's assembled in China,

but the assembly is of pieces

from all over the place.

Everything is coming

from everywhere.

I wanted my students to see

it's not just

cost of wages or labor.

It's also which country's

workers add what value.

My MINI Cooper

is made by a foreign company.

But where a company's

headquartered

means less and less

in this new global economy.

Technologies

like cargo ships, containers,

satellite communication

technologies,

and eventually

computers and the internet,

these technologies enabled

the production process

to be parceled out

around the world.

Large numbers of American

manufacturing workers

began to lose their jobs,

which meant it inevitably

began undercutting

the wages of a lot

of working Americans.

Even factories

remaining in the United States

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