CW 521 - Confronting Capitalism: Real Solutions for a Troubled Economic System with Philip Kotler.

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Welcome to the Creating wealth show. This is your host, Jason Hartman. This is episode number 521. Sometimes I can't believe how many episodes we have. 5, 21 already. Is it really that many? Yeah, I guess it is. And today our guest will be Philip Cutler. He's a professor, he's written many, many books. And today we are going to debate a little bit of his book. Don't say folks, don't say listeners. I never have anyone on the show that disagrees with me because, you know, I do, and I didn't know that he would to start with. But you know, I really have lot of guests with very divergent viewpoints, divergent from my own and divergent from each other. So we're going to talk mostly about his book, Confronting Real Solutions for a Troubled Economic System. I would say, gosh, I don't know. Well, you'll hear what I have to say here in a moment, but it's just kind of a little bit indicative of the university system or where there's just a lot of thinking and a lot of theory and just very little practice. So many of these things back to, you know, Marxism, they sound so good in theory, they make so much sense. Plato's Republic and the whole idea I remember from high school and studying that of how we should have everybody's job should be kind of designated for them by the, the power structure, by the government, although that's not what this book is about. But just these concepts that I don't know, practice is much different than theory. I'll just leave it at that. But I'll tell you, I did just finish a fantastic book toward the end of my European trip. And I am back home now, back in Phoenix but this won't be home for long because I will soon be living in San Diego, actually. La Jolla, to be specific. Beautiful La Jolla, California. And again, the only person in human history. I may be setting a record, a world record here, folks, for the only person in history to move to California to save on taxes. Yes, as amazing as that may sound, I am probably the first. But anyway, I finished a fantastic book toward the end of my European journey while I was in Ireland and England. I don't. I may have started this one actually in Croatia before I left Croatia, but it's called Sapiens A Brief History of Humankind by Yoval Noah Harari. And that book is fantastic. It was so good. I need to go through it again. There's so much there. It just covers every area from government to commerce to evolution, biology. It's just wow, what an unbelievably comprehensive and interesting book. So I'd highly recommend that one. We're also going to of course, jump into Confronting Capitalism with our guest today. We will try to get Yuval Harari on an upcoming show. You know, I think we have him booked here. I haven't looked at my calendar, but I know he's booked. And that is Dr. Warren Farrell, author of many books as well. One of them that I recently finished entitled the Myth of Male Power, which was pretty mind blowing for me. So, gosh, a lot of great books. I just love getting through all of these books. They're so good and so fascinating and so interesting. What else? Gosh. Venture Alliance Our first Venture Alliance Mastermind weekend is coming up and we've got an awesome, awesome weekend planned for everybody in San Diego. That's the second weekend in June. It's the weekend of the 12th, 13th and 14th. If you are on the fence and I know some of you are joining the Venture Alliance. Couple things to know. First of all, number one, you can come as a guest for that weekend. No commitment other than that weekend. And your guest fee will be applied toward your membership if you decide to join. So that's a great deal. Also, as you know, I haven't really marketed this at all yet. I plan to start doing that because I'm really excited about the Venture Alliance. I think it's going to be one of the best, best things I have done. The introductory prices only apply to the first 10 people to join the first 10 members. So you know, we're not terribly far away from that now. And as soon as I start really marketing it, other than just kind of casually mentioning it here on my show with nothing planned, we're going to be past that 10 member Mark and the price is going to increase. The first 10 members are kind of the, you know, those are the founding members, if you will, of the group. We're going to just do all kinds of amazing things. I was talking to Fernando today about our new software. We're going to be unveiling kind of the prototypes of that to the Venture alliance members. We're going to be looking at deals that we can do together. This may well be the only mastermind group out there that is founded on the idea of doing deals together, getting together with a group of people. Not a fund manager, not a pool where some general partner runs the pool and skims all the profits off the top, but more on a more egalitarian. Gosh, I can't believe I'm actually using that word because I usually don't like what it implies. But in this case it's a good thing. A more egalitarian system of doing deals together where we all go in and we are potentially equal partners. We don't have that person skimming all the money off the top. So you know what I think about pools? They are for fools. When it's this type of pool where you're doing deals with partners and people you know and people that are on equal footing to you, that is a different deal. I think that kind of deal is okay. I've done many of them, various real estate transactions over the many years I've been doing this. Really, they've all worked out great with only one exception. That was working out great until the end. Maybe I'll tell you that story sometime. It wasn't even that bad, but it wasn't great, I'll put it that way. So there we go. Come and join us for the Venture Alliance. Go to our little temporary website, venturealliancemastermind.com that's venturealliancemastermind.com and we do have a little brochure that we're developing. Again, I haven't really done any marketing on this, but if you want a brochure and application, send me an email. Most of you listening know my email address. So I don't need to say it on the air. I don't want to because then all the spam bots, they spider the transcript and I get a bunch of spam. My email address is fairly easy. It's my name, actually, I could say this. It's my name at my website, jasonhartman.com so that's pretty easy. It's just my first name. Anyway, I know a lot of you know it. So shoot me an email if you want an application and a brochure for the Venture Alliance. We'll send you one out when it's finished. But you don't have time to wait for that. If you want to come to San Diego for our first inaugural event, just go to Venture Alliance Mastermind and sign up or go to Jason hartman.com and in the store. You can sign up as well in the store section. Anyway, that's pretty much it. I got a lot of stuff to discuss, a lot of articles, a lot of things. You know, my new home when I re established residency there in California, I really kind of hate to do it. I'm looking at a really interesting article that is one of the things that really kind of made me leave when my mother got this traffic ticket and it went up to $600. California now has $10 billion in traffic fine debt that people cannot pay. Just one of the symptoms of a hungry, greedy, mismanaged state that is trying to take advantage of its own citizens. You never want to live in a place where your government really hungry because then the government goes into business against the citizens. But given my big huge $738,000 tax write off that I have to re establish residency to get, gosh it's gonna be worth living there. And living in La Jolla California is not exactly torture. Anyway, so more on that. I know I talked about that in the past and I know some of you been asking about it, thinking I've moved already. I haven't moved yet, but I will soon be a resident again of California. So that's the news. I've got another interesting article I want to talk to you about in an upcoming episode about properties that are underwater and how it's not always such a bad thing. I want to talk about Elizabeth Warren, her calling for hearings on the banks which I think is awesome. How these cartels in our government basically prey on the citizens. So we've got a whole bunch of big stuff coming up. Self driving trucks and how that's going to change the economy. Of course, lots to talk about in terms of real estate investing. We had our Jason Hartman University Monthly call this evening. It was pretty interesting. You know we had an expert in attorney on talking about Dodd Frank, all of that and I don't know if it was really the most exciting call. You know most attorneys are not Mark Kohler, they're not known for their speaking ability. But there was some really good technical information on that. So anyway, more on all that stuff later. Let's get to our guest without further ado and hear what Philip Kotler has to say about confronting capitalism. Here we go. It's my pleasure to welcome Philip Kotler to the show. He is a SC Johnson Distinguished professor of International Marketing at the Kellogg School of Management at Northwestern University. He's the author of over 55. Did you get that? 55 best selling books and marketing and economic books, including the new book Confronting Real Solutions for a Troubled Economic System. Philip, welcome.

How are you, Jason? I'm doing fine and looking forward to our discussion.

Well, it's great to have you on the phone. And just to give our listeners a sense of geography, we were talking about this a little bit. Where are you located today?

I'm in Glynco, Illinois, which is really a suburb of Chicago. That's where my home is.

Fantastic. The title is interesting and it sort of, when I first saw your book, it made me think of the quote and forgive me if my attribution is wrong here, but maybe Winston Churchill, possibly capitalism is a terrible system. It's just better than everything else. It just made me think of that for some reason. Do we need to confront capitalism?

Yes. Let me say that by the way, the Winston Churchill quote was about democracy, not capitalism. But others, including myself, said he could have also said that about capitalism.

I think someone has sort of ridden on his coattails and taken that quote and rephrased it because I've definitely heard that one before. But go ahead. Yeah, please.

Right, right. It's very interesting. Americans live under two systems. One is called the economic system is called capitalism and the political system is called democracy.

Both are great systems. They're better than the alternatives. However, that doesn't mean we shouldn't try to improve it. So let's take capitalism and notice some things about its performance. By the way, I will say that it's great at creating goods and services. Go into any shopping mall and you'll see 140 stores and they are just piled up with Levi jeans. And no one is going to go without goods and services.

We call that supply side capitalism. So the supply side of capitalism is very strong. The demand side is not so strong because if it was, those goods would have turned over faster. Even in car lots, we wouldn't have cars sitting around for 30, 50 days unsold. So capitalism has great supply capacity. But the question is, can we get more of it bought by people? Now the answer is either that everyone in this country has all the things they need. So that's why they're not buying more or they're buying it on the Internet. And we don't see it in the shopping centers because there is a shift from retail stores to online or there's a lot of people who would love to have a pair of jeans and more things like that, but they don't have the money. So one thing about the situation is capitalism is creating a growing income gap between the wealthy and even the middle class and the working class and the poor. And by the way, when that happens, two other things happen. It slows down the rate of economic growth because if people cannot buy, have enough money to buy things, we don't grow at 4% a year, GDP, gross national domestic product, we grow at half of 1% or something. And then the other thing is people being paid low incomes in many places, just about the minimum wage in many places. The result of that is high indebtedness because people don't want to just not have the things they need or want, so they buy it with credit cards. And so the gap in income causes a slow rate of economic growth and a high level of growing indebtedness. And I think all of us should figure out what we can do to make capitalism work better.

It just makes me think when you were talking or saying where capitalism isn't working. Quite right. And there are certainly many problems, and one that concerns me greatly, greatly is the diminishing middle class. That has always been, in my opinion, something that has really helped make America a very stable country. And if you look at these banana republics all over the world where you've got the rich and you've got the dirt poor, those just are terrible places to live. I mean, even if I were one of the elite and the rich in one of those countries, I wouldn't want to live there because, well, you'd be.

With a gated community. You would have even a little militia of your own.

Terror. That's. I hate that idea. You know, I go to, you know, even Costa Rica, which many people think is a great place. You know, you see the razor barbed wire, the bars on all the windows, the problem with the squatters, I mean, that's no way to live. Who wants to live like that?

Well, when a country has poor people, there's a lot of problems because some of them will have to live and they'll turn criminal. Some of them won't go to the hospitals, they have no money, they'll turn sick and diseases will spread. There's every reason why the Rich should help reduce poverty and so on. And yet the way it's going, Jason, it's like they ignore what is in their interest. It's in their interest to not take $30 million home that year, which CEOs are doing about 600 times what a worker gets. It's in their interest to make this society work so they can sell more goods.

Yeah, of course it is now. So that brings me to an interesting thing that I have really never gotten my head around. And I do consider myself an economist, for better or worse. But the concept of Henry Ford back in the day increasing the wages of his workers so they could afford to become his customers, brilliant move by him. Does that really work? I mean, I don't know. That just seems like, I mean it increased the cost of the product. Product. If you, if you pay the workers more, you've got to raise the prices or at least there's pressure to raise prices. What I see is that, and you know, just feel free to comment on all of this, but I want to dump one more concept on you is that people complain about the greedy CEOs. And I agree. I mean, you know Lou Dobbs book ten years ago, War on the Middle Class, when I read it, it influenced me a lot. And you know, he talked about the, the CEO pay gap has just increased exponentially over the years. And it's certainly has, there's no question about that. But these, these corporations are really just pass through entities, aren't they? I mean, I mean these greedy boards of directors and C class executives, they're not going to take a pay cut. You know, when, when you levy regulations on them and taxes on them and redistributionist policies and increase the wages and, and more OSHA regulation, all they do is raise their prices. You know, I mean, does it really cut their pay?

Yeah, here's the thing. I understand.

Many, I know some wealthy people and I know they say they work hard and they've built jobs. They're job builders, not job creators. Killers. I mean, yes, but here's the thing. There are several steps that can be done to adjust things better before going to real sharp redistribution or wealth. For example, the minimum wage. It turns out that at McDonald's, about a good number of workers at McDonald's are on food stamps. Namely they're getting their 7. They're paid a little more now than $7.45, but that was the minimum wage for a long time. They're on food stamps now. The argument I would make is hey McDonald's, you're not paying enough and the taxpayers are paying what you should be paying for the workers.

And you know what, that is an excellent point because that has been argued about Walmart, that the public sector is really supporting Walmart because they're paying for the aid. And you know, listen, I'm really no believer in government programs, okay? If those went away, then those companies would have to pay more because the workers would just pressure them to. And that would be the way the system works out, in my opinion. But you know, these externalities as they're known, and you know that term is commonly used when it comes to the environment, the externality cost of capitalism. And I'm sure you'll comment on that. But if McDonald's raises their wages or if they're forced, even worse if they're forced to raise it like Seattle, $15 an hour minimum wage, you know, they're just gonna move toward automation and robotics. I just read an article about the McDonald's burger flipper that can prepare. And it's not just a flipper, it can prepare 300 burgers, what, per hour or something like that. It never gets sick. It never sues you for sexual harassment. You know, I mean, it never complains.

Well, that's my chapter three in the book about. And four, my chapter's having to do with will the US be able to produce enough jobs for of the people in the United States or will many be lost through automation of the kind you just described? But digitalization and automation are even hurting the lawyers, some doctors and others too. So it is a fundamental question. But here's the thing. Let's say that every company that makes something is causing some damage to the environment because they're dumping some chemicals in water, but we'll try to stop that. Or they are smoking, smoke goes in the air and we're getting that effect of pollution, whatever. Now should they be covering that cost or should the public cover the cost? Those are what you mean by externalities. So what we say is the GDP is not quite an accurate measure. It shows the value of the goods and services produced. But we really should subtract from the GDP the damage, the cost of the damage done that they're not caring for. Now here's the thing. Let's say we do even require McDonald's to pay more because let's say minimum law.

Okay, minimum wage. Now here's the thing. Then McDonald's will go to more automation possibly. And that will be a job killer. You're right. Or they will go to race to raising their prices. Well, that's fine. Raising the prices so that they at least cover the costs that they are creating. And if people buy fewer hamburgers, that's a judgment that it isn't worth the value has. Some of the value has gone from the fast food industry. But that's what companies have to do. Their prices should really reflect.

Not only what they produce, but the damage they've produced. So therefore, in the end, I'm not concerned about McDonald's raising its prices. That's what they ought to do to cover more of the cost.

But then the consumer, see, this is such a difficult thing. And I wrestle with it. I don't know what to think about it. I really don't. And just so you know, where I'm coming from, I'm pretty much a libertarian. I don't believe in government. I don't believe in giant corporations either because they're just like government, they're in bed with government. And you know, that whole thing gets so corrupt. But you know, it's like the, the trade issue, international trade issue, you know. Okay, so Americans lose their jobs because the company's outsourced to China, Philippines, India, et cetera. Right. And let's just take the Walmart example and use China.

They killed the middle class, basically.

They do, you're right, no question. But, but the consumers are those same people that go to Walmart and shop and they love the low prices. How do you reconcile this idea?

I don't know.

Can you have it both ways?

No. We got a tough problem there. We could always prevent companies from going abroad, but they not only go abroad and destroy, and therefore the factories are not here. By the way, the middle class was built by factories, basically, and by the existence of unions, unions which have disappeared virtually, were there to insist on health benefits and higher wages and so on. And those workers had middle class incomes, they had their home and the wife didn't even have to work. So now the factories are abroad. All right, so can we get back, can we recreate a middle class? Well, it's not going to be. The factories aren't going to come back here. And we understand the corporations for doing that. But do we also understand the fact that they're sitting on trillions of dollars abroad which they won't bring home? Now you may say, why don't they bring them home?

Right, but they would if there was an amnesty. Yeah, if there was a tax.

Well, the thing is in bringing them home, it's 35% corporate taxes. So now the question is, what is corporate taxes about? Why Are corporations taxed? Well, if you believe in what happened with.

Citizens United, that a corporation is a person that alone should argue that they have to pay their taxes, then.

The corporation should be able to go to jail just like a person. That's the Citizens United thing. They can't have it both ways. Yeah, right. Okay. They should be subject to criminal penalties, and you just can't have it both ways. Citizens United.

Well, I'm against the fact that they're persons myself, because in any corporations, there's so many people with so many political views of difference that they can't have the boss, the CEO, decide what is the view of that company and spend all the money to get the view done politically.

Very good. Yeah, I agree.

So here's the thing. Now, maybe 35% is not a just corporate rate. I've checked on other companies, countries, and they charge a number of them and the European ones, something like 20% corporate tax. And the corporate tax is to help pay for the benefits that the corporations have enjoyed from roads that were built and ports and airlines and so on. And sometimes they don't feel that's government to me. You and I can argue about this is a very positive force in principle to.

Adjust differences that occur. The libertarian view. I understand this idea of freedom, but let me tell you a funny thing. When I talk to Republicans who keep saying liberty, freedom, so on, and I say, what about the woman who wants to have an abortion? Well, she can't. What about.

Several other things.

They are not libertarians. They don't want to let people make choices about things that they did.

But that's the Republicans. That's not the libertarians.

They're not libertarians, but they keep talking about freedom. And liberty is what the Republicans stand for, and yet they're now not letting women do what they want with their bodies. They're not.

I'm just not.

Well, I don't want to digress too much, but, you know, you do have to admit that it's not just the woman's body that is a life. Okay. I mean, you know, Steve Jobs was almost an abortion.

But that's a religious point of view.

Well, yeah, I know. It's a scientific point of view.

I mean, you know, look, look, so is an egg. When I crack an egg, I'm destroying a chicken.

But that. That egg isn't fertilized.

That's. Sometimes it looks like it is. Okay.

I had eggs for breakfast today.

Okay, well, let's go back to what you said.

But we eat animals anyway, so, you know, That's a whole different discussion. And I did a show on that yesterday, interestingly. But, you know. Okay, go ahead.

Right. Okay. So here's the thing. When I look at the situation in the United States and it's the performance of capitalism, here are some things to notice. I see a lousy infrastructure in the United States that the civil engineers who rate ports, roads, bridges, and so on give it, on the average, a C minus or D rating for the state of our infrastructure. And this is particularly bothersome because we want to create more jobs and we have the workers who can fix the infrastructure. Secondly, I see very poor public schools. The kids are so weak in math, science and English. English that what can we do about that? And then. And by the way, they're our future. Building human capital is our future. In fact, thank God, Thank God Chinese people and Indian students are coming into this country because they're coming with all the things that we're lacking. And then the college students. Listen, let's just take one more. The college students owe collectively $1.2 trillion, the average one owing 30,000. So we have 15% poverty in the country, and we have a lot of people still without health insurance. So that's what we have to itemize as a set of problems that my book addresses and we want to work on.

Tell us about some of the solutions to those.

Okay.

We talked about raising minimum wage. I'll talk about closing tax loopholes.

And the particular one that I would close is capital gains.

We have become not a manufacturing nation. We are a nation.

That makes money on money by playing with money, the stock market. So people have even suggested, how about a tax? It's a very small tax on every financial transaction where you're just buying stocks, selling stocks, you're buying bonds, whatever. That would be money that we could put into reducing the debt of college students. And by the way, if those students of ours had gone to Germany for school or to Sweden, there would be no tuition.

And then the capital gains tax is 15%. It ought to be the normal income they own. And in fact, Warren Buffett has said, I'm ashamed that I'm paying only 15% income tax. Mitt Romney should be ashamed. And frankly, I want to be taxed at my income level, which would be 39.5%. And that's another thing. Why is it that way? We used to charge 90%, then 70, then 50% as the highest tax rate. Now it's 39%. And that was forced down.

Well, that's. I got a comment on that. Okay, that's not really the way it was. Even though the marginal tax rate bracket was higher.

There were many more loopholes and there was much more encouragement back then to do silly stupid investments. I remember all the windmill investments in the 70s and the doctor who had a big income buying the windmill. That made no sense because you'd get a tax break. And with those high tax rates as a marginal rate mal investment was encouraged. So it's not just about the marginal tax rate, it's about the number of loopholes. And our tax codes are ridiculous.

We got, don't you think a billionaire at 39 point percent as the marginal rate. Does that make sense to you? I'm not talking about 70 or 90. How about 45%? How about 45%?

Well, if they live in California, they're going to pay 45% combined state and Fed.

Okay, okay, good. Here's the thing. How do you feel about the wealth concentration in the world with 85 people owning so much wealth that it could be what 3 or 4 billion people are getting?

That concerns me greatly. I just think our answers to that are different because.

Well then just do an estate tax. Make sure that the guys who pass away.

As Warren Buffett says, I'm going to leave enough for my kids to make out as kids, but not more to spoil them.

Yeah, the Warren, but he's sort of backtracked on that a little bit. But that is the Warren Buffett concept, you know, to. He, he originally said he agreed with a hundred percent estate tax so everybody would start, even each new generation. And you know, that might be kind of good because these rich spoiled kids usually are do nothings or ne' er do wells. I mean, maybe not always, but a lot of times they are. But, but anyway, the thing that you don't seem to be asking yourself and just correct me if I'm wrong, is that, you know, where does that capital formation come from? If you tax the capital formation, then you disincentivize people to form capital. And capital formation is what creates the wealth of every society and economy. People have got to be encouraged.

Well, I'm for innovation and entrepreneurship. But let me ask you, are you telling me that Steve Jobs would not have done what he did if he was double taxed?

That's not the question.

Are you telling me Walt Disney would never have started? Walt Disney? Are you telling me that Southwest Airlines guy, Herb Kelleher would not have created the Southwest Airlines? It's crap. Really. These guys love doing what they're doing. Richard Branson would Do it if he were tax double. He said that?

It's not that simple. Listen, I was just with Richard Branson on his private Necker island two weeks ago. Okay? So here's the thing. All of those guys probably would have done what they loved if they were taxed higher, but they could have never scaled it up the way they did. Okay? I mean, it's easy for Richard Branson to sit back and talk about correcting the environment when he owns a frickin airline. Why doesn't Richard Branson close his airline? That would be the best thing he could ever do for the environment, it would seem. I mean, you know, come on, are you serious? I mean, the hypocrisy among these wealthy leftist is mind boggling to me. I mean, Warren Buffett says my secretary pays more tax than I do. Right? Well, no one is stopping him from giving more money to the irs. In fact, he's in litigation with the irs, you know, fighting over an audit saying that he. Because he doesn't want to pay as much tax. Okay? I mean, you know.

Well, it's a question of rule of law he had. He, he disagrees with.

Right, but, but, but if he, why doesn't he put his money where his mouth is? If he says the government needs more money, give them more money, they'll take it. That's a charity. It's a different, different thing. But you know, we can talk about the Gates foundation as long as you want.

I have an answer to that. Here's what I would do. I would say to a group, for example, that just got visible. It's called the patriotic.

The patriotic rich people. I forget the full name. They want to be taxed more patriotic Americans or something for higher taxes. They want to pay more tax. Now the problem they have is they don't want the money to go into defense because why build another battleship when the Navy doesn't even want it? So they said we want to be paying more taxes, but it goes right into an education fund to improve our education or a health fund. So I want to pay more taxes so it goes to those purposes and we'll all be better off. But we don't have a system like that yet.

Well, look, I mean, the reason I'm not in favor of higher taxes is because I think Steve Jobs and Herb Kelleher and Richard Branson, they would have remained much smaller. They would be running small businesses now.

No, no, they could always borrow money when it's a great idea. They don't need to have the money.

Well, they have to borrow the money from someone.

They don't have to have their own money. All they have do to, to do is find a venture capital firm or go on the market. Look at, there's no money that these guys who are coming out with new products, they go, so these venture capital.

Firms would never have the capital or as much capital. Of course they'd have some capital, okay? They'd never have as much capital to loan to Steve Jobs and Herb Kelleher and Richard Branson, your examples, okay? If they were taxed at a higher rate because people like you would be saying, well, these rich venture capitalists, they should be paying higher taxes. So, you know, the argument just trickles right down. See, I think taxes are just trickle up poverty. It's, you know, no big government is ever good for society, okay? And I think everybody on the left and the right and I've had these debates hundreds of times with people, okay? And you know, I take a middle ground a lot of this stuff, okay? But people will agree that government is inefficient and there's lots of corruption in government. And I mean, you would agree with that, wouldn't you?

I would say big business is inefficient. I would say anything big is inefficient.

We will agree there, my friend.

Yes, we have very. Look, and then they go to the IRS and they give it so little money to go after the guys who are not paying even the taxes they should. There's a lot of corruption. I'm not a judge.

All of government as bigness is bad. But all I'm saying is that, look, if big is the enemy, I mean, we got to have some big companies because we'll never have airlines, we'll never have intel, we'll never have Apple. You know, you can't do that stuff in a small business. You got to get big, okay? And the problem is that the lobbyists all work for these big companies and they're part of the government. I mean, the corporatocracy is the government nowadays. It's disgusting, you know that, you know, whether it's Democrat or Republican, it doesn't matter. They're in bed with the giant companies, okay? So we'll probably agree on that too. But all I'm saying is on the government side, if you make government smaller, then there will be less inefficiency and less corruption, okay? It's going to be there because inside any human organization you're going to have people who are on the the take. It's just part of Our fallen nature. Okay, so, you know, make it smaller and the corruption will be smaller and the inefficiency will be smaller. That's my contention. Go ahead.

The question I want to ask you is we are living in an interconnected world where all kinds of problems come up and we need strong government to figure we can't go back to everyone that can operate in his own self interest. I think the two deadliest structures that people have bought into is Milton Friedman's argument and also Ayn Rand's argument that selfishness is good and they confuse self interest with selfishness and greed. That's good. And Milton Friedman says the only thing that counts is profit. Well, that. Thank God, it's falling apart because we now say that companies that are going to be successful are looking at the stakeholders, not just the shareholders, and they are judging companies by whether they have purpose and passion and performance.

So it's a. You got to have state governments. You have to have city governments. You know, Chicago itself, for 10 years or 15 years, has been aiming at Japan and working with Japan. You know, every big city is a city state.

And our big cities grow faster than the states. They're in the states. Keep them back. And in another book called Winning Global Markets, I developed a thesis that basically we've got to unharness our cities to act in their own interests. And look at how Chicago got Boeing to move from Seattle to Chicago. They can also find a European company and get it to come over here. So cities are the engine of growth now, not states. And cities are governments. And you may say, well, cities have corrupt governments, but look, go back to the prairies.

Well, I would generally agree that it should be pushed down to the more local level. I like that. I like states rights, I like cities rights, you know, if that's even a term. But I would agree. I think government should be more localized because it's much more responsive.

Yeah, I, I'm in favor of that very much so.

We're not. We. We agree on a lot of things. Okay. There's no need for us to argue. I mean, you know, we, we agree that there's a problem, for sure. The only question is maybe we disagree on how to solve it a little bit, but I don't know. So if selfishness is bad, and you know, Ayn Rand's, by the way, her book called the Virtue of Selfishness, this is really mistitled, has some really interesting essays in it. By the way, if selfishness is bad, how do you fix that? Do you make. Do you tell the government to go and force the person or company who is being selfish to hand their money over to somebody who is.

In need or not selfish or. What do you do? How do you.

No, I don't want a police state. No, it's not. I'm not in favor of that either. I think that laws are passed by, in principle, by high consensus. They get passed only if there's a lot of, you know, democracy itself is supposed to be.

There to protect the interests of minorities as well as the wealthy and the others. And so that itself is. My next book will probably be about the problems of democracy in this. In this country and in every country. As a matter of fact, because of gerrymandering that's going on in the primaries and all that, there's some real problems. And you mentioned the lobbyists. The lobbyists are terrible.

Oh, the lobbyists are the worst problem we got. If we just got rid of lobbying, you know, I mean, but people need to address. What we've got to do with the political system is just get the money out of it. I mean, it's just a disgusting money pit and, you know, it's big business. Nobody can compete, you know, you OR I. Donating 100 bucks to a candidate doesn't matter to them. You know, it just doesn't even matter. It's a little blip on the radar. It's nothing. And that's where the rights of the people have been taken away because we're not big enough to do anything. The government has been hijacked by Wall Street. It's been hijacked by, you know, lobbyists. And, well, lobbying should be allowed because people need to access their government. That was the original idea of lobbyists. Okay, you know, but when those lobbyists walked in there with maybe literally, I don't know, probably literally too, but suitcases full of cash, you know, I can't. My voice isn't heard. Okay, your voice isn't heard. Only the suitcase full of cash is heard heard. Right?

Yes. We don't even have a union movement. That would at least be the voice of some of workers or some people who are. But we don't have that anymore.

Well, the unions can exist. I mean, they're allowed to exist, right?

Yeah, that's right there. The whole issue is open or closed shop.

But see, should someone be forced to join a union when they to get a job? You have to. It's mandatory. I mean, why can't you have a choice?

Well, the idea is that if there are benefits, why should the free riders get them too. But as a matter of fact, maybe that's the answer. Let's have open shops. And those who don't want to join the union, the benefits don't go to them.

Yeah, I agree. Because these unions are so corrupt. You know, that's the problem. They get big too, just like the big companies, just like the big government. These union bosses are. They're on the take and they're taking all the money. And you know, I mean, government looks out for itself first. The union. Look, leadership looks out for itself first. This selfishness is just part of the human deal. And I think, I think we got to let the market just regulate it out of the system. And now thank God for the Internet because, you know, companies, you know, their deeds get out there, their dirty deeds are exposed in minutes around the world now. I think that's really the future is, is the marketplace and freedom of communication. And let's hope that that lasts forever because, you know, if, if your boss does something bad to you, you can go online and write about them.

I heard of a good market solution. I guess it was a guy on ted, TED Talk and he said, I think he's a.

He'S a billionaire. I can't remember his name. He says he's trying to put together a new index for rating companies that he calls the Just Index J U S D, which is for justice. And he says.

One thing in the index would be how sustainable is that company's practices? In other words, they really care about using the best materials. They're not creating pollution and all that. How sustainable. Secondly, how fair is their compensation? He says he's going to have a rating for that too. So, you know, if they. The workers should get. Look, here's what he's saying. Productivity has been shooting up in this country because capitalism is a very good system, but the sharing of the income generated has been so distorted. Okay, so he wants to rate them on how fair the compensation is, including the CEO's compensation. Then he says, when you see my index and you're choosing to buy genes and you look at the two companies, you're trying to decide between the one that has the higher just rating is the one. Since you. The jeans are pretty much the same, go to. It's a market solution. In other words, he wants consumers to be looking at who they're buying their food from and their restaurants, their McDonald's and so on, and then just decide if they want to be voting for those who are paying outrageous, paying minimum to the workers and outrageous to the boards and the CEOs. That's a market solution, by the way.

Yeah. You know, from 2000 to 2002, Larry Ellison, CEO of Oracle, we all know him. Okay. He, his personal take from that company was $781 million in two years. He took almost a billion dollars out of that company, according to Lou Dobbs book. And at the same, in the same two years, his shareholders lost 61% on their investment. I mean, that's just unbelievable. And that's, that's legal. It goes on every day. Wall street is the most modern version of organized crime. It is just completely unaligned with the interest of the shareholders. Okay. And it's a terrible thing, but thank God the word gets out.

You know, I wish the stakeholders, which are often big wealthy people and also big companies, if they would sort of raise these questions. Why are they so shy about the. In other words, the income and wealth of a company is shared or not shared very much. And when we find out how good the company is with making the workers better off, making the shareholders better off, you know, Larry Ellison should not have taken that much and let the shareholders take more.

Of course not. Yeah. It's ridiculous.

So anyways, I want to just say this, Jason, because you're questions are wonderful and provocative. I wrote the book Confronting Capitalism because I'm a capitalist. As a matter of fact, I think we would be better off as a country if we had more capitalists. That is, I would like every worker to own stock in a company.

But I grew up with knowing a lot of, seeing a lot of poverty. My own family was working class. I saw very poor people. And as an economist, the reason I got a master's degree and a PhD in economics was that I wanted to understand how income is generated and how income is distributed. Now, I didn't go into that with my training. Initially I went into a part of the question which is how does a. The engine work, the economic engine? And it occurred to me that marketing was the force that made that counterbalance the big supply side of the economy where we can create so many goods and services. Marketing is how we try to get the stuff purchased. And so I wrote the leading textbook. It's used around the whole world. It's called Marketing Management. So, but I wanted to come back to the original question that bothered me as a trained economist. And so the 14 chapters, each one takes another aspect. And it doesn't only analyze why that has been happening, but what has been proposed to improve the situation. So in chapter two, which is on the Income gap growing. I have a list of seven or eight very some smaller steps. And the biggest step might be a progressive income tax or an estate tax that is a little higher against the people who are trying to get the estate tax to not exist. I mean, they want wealth to even get bigger in its concentration. They want more Koch families to exist. And so I have had good luck with this book. It's getting a lot of attention and it was very nice of you to be willing to speak to me about it. But I only ask your readers to go to Amazon and see the reviews. Very excellent.

Yeah, the reviews are Great. You've got 14 reviews. You got four and a half stars. And I mean, my gosh, you've got over 55 books. I click on your name on Amazon and it just goes on and on. You've got more books than anybody I've ever known. So congratulations on that. And you know, this has been a really provocative discussion, but do you want to give out your own website, kotlermarketing.com.

Well, Cutler Marketing is my brother's marketing web page. And yes, I'm on it, too, but it's his firm. I help him out and so on. The other way to reach me is with my email, which is pkotlerol.com Philip.

Thank you so much for joining us and engaging in this debate. Very, very interesting. And I hardly think in, you know, the 40 minutes we spent together, we did go over. So thanks for staying on that we're going to solve any of these problems, but I think we've given some people something to think about. You've given me something to think about. I hope I've given you something to think about.

Absolutely.

I just appreciate the spirited discussion. So thanks for joining us.

Thank you. Thank you.

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