Inside Job Page #15

JOHN CAMPBELL:
Hm, ye-, well – yeah; basically irrelevant.

02:
30:34.18

CHARLES FERGUSON: You've written a very large number of articles, about a very

wide array of subjects. You never saw fit to investigate the risks of unregulated credit

default swaps?

MARTIN FELDSTEIN: I never did.

CHARLES FERGUSON: Same question with regard to executive compensation; uh, the

regulation of corporate governance; the effect of political contributions –

MARTIN FELDSTEIN: What, uh, what, uh, w-, I don't know that I would have anything to

add to those discussions.

02:
31:00.29

CHARLES FERGUSON: I'm looking at your resume now. It looks to me as if the

majority of your outside activities are, uh, consulting and directorship arrangements with

the financial services industry. Is that, would you not agree with that characterization?

02:
31:15.10

GLENN HUBBARD:
No, to my knowledge, I don't think my consulting clients are even

on my CV, so –

CHARLES FERGUSON: Uh, who are your consulting clients?

GLENN HUBBARD:
I don't believe I have to discuss that with you.

CHARLES FERGUSON: Okay. Uh, uh –

Inside Job transcript – Sony Pictures – September 2010

66

GLENN HUBBARD:
Look, you have a few more minutes, and the interview is over.

02:
31:30.09

CHARLES FERGUSON: Do you consult for any financial services firms?

FREDERIC MISHKIN: Uh, the answer is, I do.

CHARLES FERGUSON: And –

FREDERIC MISHKIN: And, but I d-, I do not want to go into details about that.

02:
31:39.09

CHARLES FERGUSON: Do they include other financial services firms?

GLENN HUBBARD:
Possibly.

CHARLES FERGUSON: You don't remember?

GLENN HUBBARD:
This isn't a deposition, sir. I was polite enough to give you time;

foolishly, I now see. But you have three more minutes. Give it your best shot.

02:
31:54.25

NARRATOR:
In 2004, at the height of the bubble, Glenn Hubbard coauthored a widely

read paper with William C. Dudley, the chief economist of Goldman Sachs. In the paper,

Hubbard praised credit derivatives and the securitization chain, stating that they had

improved allocation of capital, and were enhancing financial stability. He cited reduced

volatility in the economy, and stated that recessions had become less frequent and

milder.

Credit derivatives were protecting banks against losses, and helping to distribute risk.

02:
32:29.02

CHARLES FERGUSON: A medical researcher writes an article, saying: to treat this

disease, you should prescribe this drug. It turns out Doctor makes 80 percent of

personal income from manufacturer of this drug. Does not bother you.

JOHN CAMPBELL:
I think, uh, it's certainly important to disclose the, um – the, um –

02:
32:54.00 Well, I think that's also a little different from cases that we are talking about

here. Because, um – um –

Inside Job transcript – Sony Pictures – September 2010

67

{THE PRESIDENTS OF HARVARD UNIVERSITY

AND COLUMBIA UNIVERSITY REFUSED TO COMMENT

ON ACADEMIC CONFLICTS OF INTEREST.

BOTH DECLINED TO BE INTERVIEWED FOR THIS FILM.}

02:
33:15.19

CHARLES FERGUSON: So, uh, what do you think this says about the economics

discipline?

CHARLES MORRIS:
Well, heh heh, heh, it has no relevance to anything, really. And,

and fe-, indeed, I think, um, it's a part of the, it's a s-, important part of the problem.

02:
33:32.23 {PART V: WHERE WE ARE NOW}

02:
33:47.10

NARRATOR:
The rising power of the U.S. financial sector was part of a wider change in

America. Since the 1980s, the United States has become a more unequal society, and

its economic dominance has declined. Companies like General Motors, Chrysler, and

U.S. Steel — formerly the core of the U.S. economy — were poorly managed, and falling

behind their foreign competitors. And as countries like China opened their economies,

American companies sent jobs overseas to save money.

02:
34:24.15

DANIEL ALPERT:
For many, many years, the 660 million people in the developed world

were effectively sheltered from all of this additional labor that existed on the planet.

Suddenly, the Bamboo Curtain and the Iron Curtain are lifted; and you have 2.5 billion

additional people.

02:
34:41.16

NARRATOR:
American factory workers were laid off by the tens of thousands.

DANIEL ALPERT:
Our manufacturing base was destroyed, literally over the course of a

few years.

02:
34:49.23

NARRATOR:
As manufacturing declined, other industries rose. The United States leads

the world in information technology, where high-paying jobs are easy to find. But those

Inside Job transcript – Sony Pictures – September 2010

68

jobs require an education. And for average Americans, college is increasingly out of

reach.

02:
35:07.26 While top private universities like Harvard have billions of dollars in their

endowments, funding for public universities is shrinking, and tuition is rising. Tuition for

California's public universities rose from 650 dollars in the 1970s to over 10,000 dollars

in 2010.

02:
35:29.04 Increasingly, the most important determinant of whether Americans go to

college is whether they can find the money to pay for it.

Meanwhile, American tax policy shifted to favor the wealthy.

02:
35:41.21

{OCTOBER 11, 2006}

GEORGE W. BUSH:
When I first came to office, I thought taxes were too high; and they

were.

NARRATOR:
The most dramatic change was a series of tax cuts designed by Glenn

Hubbard, who at the time was serving as President Bush's chief economic advisor. The

Bush administration sharply reduced taxes on investment gains, stock dividends, and

eliminated the estate tax.

02:
36:04.05

GEORGE W. BUSH:
We had a comprehensive plan that, when acted, has left nearly 1.1

trillion dollars in the hands of American workers, families, investors, and small business

owners.

02:
36:14.05

NARRATOR:
Most of the benefits of these tax cuts went to the wealthiest 1 percent of

Americans.

GEORGE W. BUSH:
And by the way, it was really the cornerstone, in many ways, of our

economic recovery policy.

02:
36:25.23

NARRATOR:
Inequality of wealth in the United States is now higher than in any other

developed country.

American families responded to these changes in two ways: by working longer hours,

and by going into debt.

Inside Job transcript – Sony Pictures – September 2010

69

RAGHURAM RAJAN:
As the middle class falls further and further behind, there is a

political urge to respond by making it easier to get credit.

{OCTOBER 13, 2002}

GEORGE W. BUSH:
You don't have to have a lousy home. The low-income home

buyer can have just as nice a house as anybody else.

NARRATOR:
American families borrowed to finance their homes, their cars, their

healthcare, and their children's educations.

02:
37:10.09

CHARLES MORRIS:
People in the bottom 90 percent lost ground between 1980 and

2007. It all went to the top 1 percent.

NARRATOR:
For the first time in history, average Americans have less education and

are less prosperous than their parents.

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