Malcom Gladwell on income inequality - The New Yorker Festival (Full) - The New Yorker

thank you welcome to The New Yorker festival I'm I'm gradual come this afternoon if I if I'm counting correctly I think this is my eighth consecutive talk at The New Yorker festival which means that if this festival had term limits I would be finished it's good it's an observation you can file under how the world would be different if the Tea Party took over this is a historic speech for a number of reasons one is it is the first time that I've ever given a talk of the festival where my parents were not in attendance so that means that I the number of enthusiastic responses I'm going to get is to at least two less than the normal my mother told me though that she if she were he or she would almost certainly like what I had to say but that's sort of cold comfort because that is she's substituting the illusion of empirical enthusiasm for the dull certainty of a priori enthusiasm know if I made any sense but I am this is also stark for another reason that is that in all of my time giving talks in New Yorker festival I have never I've always given a title and never talked about what the title was because you never know when you're asked to give the title it's months before the festival who knows what you want to talk about but this is the first time I've ever given the how to talk that's actually what the title said the talk was going to be so it is very exciting for me that finally there is truth in advertising I I couldn't want to talk about the magical year 1975 now what was magical about 1975 well there's a long answer and as a short answer the long answer is that if you look at the transformation of American society that has happened in the last generation or so which is that we have gone from a country that was among the most the equal countries in the world to a country that is now far and away not only more economically unequal than at any point in its history including the guilded including the Gilded Age but also more economically unequal than almost any other westernized country so that's the long answer is that this extraordinary transformation in the nature and shape of our society begins on or about 1975 the short answer as to why 1975 is a special year is connected to the long answer and is simply it is the year that talent started to get paid and I'm going to address chiefly the short answer as a way of answering the long answer and I got interested in this question of the magic year 1975 because last summer I went to visit a man named Marvin Miller now some of you will remember who Marvin Miller is he is the man who took over the major league baseball players union in 1966 and he led the union for the next 20 years or so and for that period he was arguably the most visible and well known and most powerful union leader in the country but I want to go one step further this afternoon as I want to argue that in the course of leading the baseball players union Marvin Miller leads the transformation of our economy in ways both good and bad now Miller is is still very much alive he's in his 90s he lives in one of those plain vanilla high-rises on the Upper East Side and he's 100% sharp and he's this little kind of wiry guy just as he was back in the day remember they would always be pictures of him you know in that press conferences and Marvin Miller will be here and then the players behind him would be you know one and a half heads taller than him and he still has his little firm on two mustache and he um he he grew up in Brooklyn he's I've really always got that New Yorker that Brooklyn honk in his in his voice to this day and there's two things that are important to know marvin miller the first is that he is a union man and i used that phrase in the sense that it was has been used historically in his country he is a kind of person who rarely exists anymore someone who grew up steeped in the rituals and ways and traditions of the trade union movement he he joined the war he worked for the war labor board he worked for one of the municipal unions after that here in new york and then he spends the bulk of his career long before he gets to baseball he is the chief economist for the united steelworkers he's one of the most powerful figures at one of the most powerful unions in the world steel workers at their height at about a million and a half members and really control one of america's most most important industries and he is in the room in all of the crucial steel negotiations of the 50s and early sixties including the steel strike in nineteen sixty two or three or four when right at the beginning of the Vietnam War the steel workers threatened to shut down the American steel industry and the dispute is negotiated in a room at the White House with Lyndon Johnson who literally locks them in the room and says I'll unlock the room the door when you solve this particular problem so he is this crucially important Union figure and it even goes back to his his early days he he one of the most formative experiences of his childhood is as a small boy at the beginning of the depression he remembers he would take the subway in from Brooklyn and go and visit his father who sold ladies coats on Division Street I'm gonna at a department store and one day he's just a little kid and he gets off the subway and he sees this commotion ahead and he walks closer and he realizes that it's a picket line and his father is is walking the picket line they're attempting to to organize the workers at this particular department store it's their retail wholesale department store or Employees Union and there's a long ugly strike at the beginning of the of the Depression his father's out for out of for about two months and he remembers one day being a sleep one night and being woken up by his father who'd come home late and his father had in his hands a copy of the contract that they had finally won from from from the department store and to this day if that was 80 years ago Miller can recite from memory in perfect detail every one of the provisions his father won that day that's a union man right it's the most important experience of his of his childhood so he understands the meaning of class solidarity and class struggle the second thing you need to know about Miller is that he is tough as nails he is just about the most formidable adversary that you could ever imagine I mean he's well into his 90s now and he's quite physically frail but if I was having a dispute with anyone in my life ranging from my landlord to you know the head of some sovereign nation he literally would be the first person I would call um he is he's the kind of person who you want in your foxhole on who you know will represent your interests as aggressively and intelligently as is possible he is not the kind of person you would ever want to cross his chief adversary when he's head of the baseball union is the Commissioner of baseball in those years who was a man named Bowie Kuhn and Bowie Kuhn represented the kind of feat East Coast Ivy League bow-tied weak-willed whiskey sipping you know Polo playing person that Marvin Miller truly loathes and Miller thought that Kuhn was a I think justifiably and they have a famous exchange where Kuhn who wanted to be friends with Miller accused Miller of failing to reciprocate his overtures of friendship and Miller responds that he doesn't think that Kuhn actually wants to be friends he said Kuhn was trying to pick my brains and there was scant possibility of reciprocity in that depart so I go and see Miller just this summer couple months ago and he tells me the following story it's 1966 and he's taken over the the baseball players union and it's a mess it wasn't actually a union in the sense that we understand a union or a sense that Miller understood a union it was a company Union it was a kind of something the owners sort of set up on behalf of the players which by the way is Miller would repeatedly point out was illegal contravened all kinds of labor law in this country nonetheless there was this little kind of wholly owned subsidiary of the owners and they basically told the players what to do and they made them sign these outrageous contracts and they gave there was no grievance procedures they could basically do what they wanted to do with the players and the players make nothing I mean they're making almost peanuts and Miller can't believe it he is absolutely stunned at the situation that the players find themselves in and he tries to convince them that they're being exploited and he's like you know you have to live this way right you can generations of American workers have stood up for their own rights you can do the same and the players don't see that I mean he's having a devil of a time trying to convince them of their plight from the player's perspective what they're famous they're ballplayers they get to eat steak every night for dinner I mean they're small town boys from the south who don't have a concept of what a union is or any notion about how they ought to be able to participate in the boundless economic riches of the game they think oh people are cheering me and I get to play second base for the st. Louis Cardinals right so Miller is trying again and again to make this point with them and he's not working you know one time for example he used to bring up the matter of baseball cards the way that the Topps baseball card company would work in those days is they would go into the minors and they would identify promising players and they would sign them up they would they would sign the get them players to sign over their rights for five dollars five dollars and if they made it into the majors they would pay them a hundred and twenty-five dollars a year and for that one hundred and twenty five dollars a year they got complete ownership of all of the photographing rights you know statistic whatever any use they wanted to make of the players image and they owed the players no royalties whatsoever it was they essentially owned the player for 125 measly dollars and Miller would say to these guys you know this is into the 70s this was going on he would say are you crazy 125 dollars why would you sign that contract and the pair's would say you know when I was a kid I used to collect baseball cards and now they want to put me on a baseball card that's what he was dealing with so when one spring he's making every spring he would make a tour of all the baseball teams their spring training sites that he's visiting the San Francisco Giants and they had their spring training in Scottsdale Arizona and the center fielder of the San Francisco Giants in those years was the right fielder was a guy named Bobby Bonds and Bobby Bonds was one of the best players in baseball he was this extraordinary combination of speed and power and Miller knew what Bobby bonzes salary was he knew all the players salary and Bobby Bonds salary was a joke he was being paid nothing despite the fact he was this extraordinary player this this this this exceptional town so he says Tunip larry having a big meeting with all the players he says I'm gonna make a prediction and he points to Bobby Bonds his son now all the players would bring their children to spring training and Miller knew Bobby Bonds his son really well he was this little kid and it was clear even at that point that Bobby bonds his son was going to be something special he had some rare that same rare combination of speed and power as his father so he points to Bobby Bonds his son he says I'm going to make a prediction if we can get rid of the system that we have as we know it then Bobby bonds his son if he makes it to the majors we'll make more in one season than his father made in his entire career well who was Bobby Bonds his son Barry Bonds right one of the greatest players of his generation and Miller was absolutely right in fact Barry Bonds made more in one season than the entire San Francisco Giants made in there entire career combined right 22 million dollars he made in 2000 and 2002 that is Marvin Miller's revolution that he took players from Bobby Bonds to Barry - Barry Bonds and I think that all of us in this room and all of us in this society are still dealing with the consequences of that revolution so in order to understand why Miller is such a extraordinary figure I think it is important to realize something really crucial about the post warriors something that we have forgotten I think and that is that from the end of the Second World War through the early 70s high-level professionals talented people people at the top of whatever field they are in on I mean CEOs investment bankers writers artists singers athletes you name it didn't make any money I say no money I mean they made a fraction of what they may make today and their income relative to the average income in America was falling so if you look at baseball players for example between the 1940s in the 1960s the both the minimum the games minimum salary and the game's top salary fell by 1/3 fell by 1/3 but in that period in 1955 lawyers in this country made more than four times the average salary average American salary by the mid-50s they were making 2.4 times the average salary that's how much they had seen their premium shrink in that period there's a the president of DuPont testifies before Congress in 1956 and he points out that his take-home pay is exactly half what his predecessor in the 30s had had taken home and when if you read the credits fascinating if you read the kind of journalism about captains of industry and people the top of their fields that was written in the 40s and the 50s what's amazing at about it is that people the journalism is marveling at how ordinary their lives are it's the exact opposite of that kind of journalism today right instead of seeing pictures of these extraordinary palaces that you and I could never own they it's really it's about the opposite it's about how they're living in circumstances very similar to the rest of us so this is wonderful 1948 Wall Street Journal profile of a guy they called mr. C who's head of one of the CEO of one of the biggest companies in the United States and he the profile of this guy starts with the reporters with him in a taxicab and the guy after he pays the taxi writes down the amount of the taxi in his expense book this is the CEO of one of the biggest country companies in the in the country his after-tax income the guy says it's got called mr. C's what he's called him as in the story his after-tax income was $36,000 a year and the year before that his after-tax income had been $21,000 a year so that put that in view basically you add a zero to get contemporary dollars so this was a guy who was the head of one of the biggest companies in the country and he was making around three hundred thousand dollars a year and he has this is the quote from the article I love this is right after the executive has said that his big extravagant was the previous year he had bought two cars but he'd had to dip into his savings to afford it because he couldn't make it out of his salary he says my idea of fun would be to have a swimming pool because the how behind the house so I could take a dip whatever I want but to build it I'd have to sell a couple of my government bonds I don't like to do that so I'm getting along without the pool now if anyone can find me a contemporary CEO of a fortune 500 company who is capable with a straight face of uttering the phrase so I'm getting along without the pool I will give you a pool right so here's another one this is from a Ladies Home Journal article 1959 Ladies Home Journal sends a reporter to hang out with a guy named mr. O'Rourke who is again one of the CEOs of the biggest of CEO of one of the biggest companies in in the United States and the reporter goes to this Sinestro works house and suburbs of Chicago and gets a tour of the house given by the CEOs wife and it's a tan room Georgian somewhere like in Winnetka or something like that and the whole article is about how it's kind of dowdy and the furniture is sort of old and the wife is constantly apologizing that well we haven't been able to afford a decorator and we don't do this and they have a summer house but is like a little cottage on a lake it's sort of miscible and at the end of the article the reporter interviews mr. o'roarke the head of one of the biggest companies in the country and he says I'm the president of one of the larger companies in the US yet chances are I will never become a millionaire that's the reality of the mid-50s now why do they make so little money well one reason is taxes back then are really really high the marginal income tax rate on incomes above $200,000 in that era is over 90 percent right so whenever you're trapped in a conversation with someone in the Hamptons who wants to tell you about how Obama is a socialist and because he wants to let the Bush tax cuts expire remind that person that one generation ago people in his position paid ninety percent marginal tax rates on their income right but the other thing that's almost more important is quite apart from taxes salaries simply weren't that generous back then for professionals and there was a feeling if you talk to economists in that era that this was a permanent condition that the way in which the American economy had evolved had had the effect of severely and permanently limiting the income paid to a talent to people the top of the profession and the reasoning was look what happened the post-war era was that the public education system the public university system expanded dramatically so all of a sudden they were now ten people applying for that one scarce job at whatever elite institution instead of two and that just meant that elite institutions could get by with paying their people a lot less money there's this great quote from a guy named Roswell maggle who is a partner at Cravath Swaine and Moore vanna's now one of the toniest of the law firms in in this country and he he writes this extraordinary thing in the mid-50s and it's basically about how he thinks that corporate law is going to die as a profession and the reason he says is that they can't pay their people enough and he says his law firm this is a great quote can no longer honestly assure promising young men if they become partners they can save money in substantial amounts build Country Homes and Gardens for themselves like their fathers and grandfathers did and plan extensive European holidays he thinks it's over right and then what happens the world changes in almost it seems like a flash taxes go down salaries start to soar baseball players become multimillionaires CEOs start cashing enormous paychecks and even bigger bonuses and huge amount of stock options and the very same lawyers at Cravath Swaine and Moore who one once thought they could never build those houses and take those vacations and save that money begin building those houses and taking those vacations and saving all that money so why does that happen well there's all kinds of different explanations and many economists have written about this and many political scientists have talked about the shift in the politics that made this happen but the explanation that I love and the one that I want to dwell on today is one that was given by a guy named Roger Martin who is Dean of the Rotman School of Management University of Toronto who wrote a really extraordinary article for the Harvard Business Review a couple years ago and he argued that it came about this transition this transformation because of a change in sensibility on the part of the most talented people in our society that they came to realize talented people did that what they possessed was rare was scarce and that what capital possessed in other words what the people running all of these companies had was all of a sudden abundant and people like those CEOs mr. C and mr. o'roarke and people like Roswell maggle woke up to what they were worth I woke up and realized oh wait a minute I can get a whole lot more money than I've been asking for and who wakes them up Marvin Miller Greg Stemm up and when does he wake them up 1975 so Miller one of the very first meetings that Miller attends in his new role as union chief is a meeting of the executive committee of baseball which is all of the honchos of the game and it's in Chicago and he's going there and sits down in this big room and he has a certain expectation about what a meeting is from his days at the yard co-workers and and he's he's absolutely flabbergasted by what happened the topic under discussion that day was that the owners had decided to change the rules by which they funded the players pension system there had been a system in place an agreement in place between the owners and the players going back for 10 years that said that 60% of the broadcast revenue from the World Series was going to go into a pot of money to fund the players pension system but the owners in 1966 were about to sign a huge new television contract and that sum of money was going to grow so large that the owners decided wait a minute if we give them 60% of this suddenly huge number we're gonna be giving them twice as much money we're not going to do that so we're going to switch this whole system to a flat fee and Miller who spent his whole life as a negotiator on behalf of the interests of Labor is waiting for the negotiation to begin and there's no negotiation they just announced it it's what they're going to do and they look at him like he's a potted plant like he's just some person who's just sitting in a corner taking up space and he's absolutely like I said flabbergasted and he sits there stunned not only that it's what they're doing is illegal it contravenes the labor law the United States of America and there are lawyers in that people in that room who had been trained in labor law right chief among them Bowie Kuhn and he looks at Bowie Kuhn waiting for Bowie Kuhn to say excuse me gentlemen you've just broken the law Bowie Kuhn says nothing now think about the situation that he's in Miller has just taken over this pathetic Union this union that was set up by the owners so they could control it and he doesn't have any staff he doesn't really have any revenue any kind of budget at that moment and he's up against the owners and who are the owners of baseball in 1966 these are some of the wealthiest most powerful men in the country and whenever the players in in previous years had tried to - - to do battle with the owners in court they'd always lost in fact the Supreme Court had ruled in favor of the owners Congress had passed laws exempting the owners something antietam antitrust provisions they had all the power right and not only that his own union the players in his owning and don't even understand what a union is they think that their lives are wonderful and they're being well treated by the owners they don't even understand it - sign away their rights for 125 dollars to the tops baseball card company is a bad idea this is a guy in other words who is in an incredibly weak position what's he going to do so what does he do well he's Marvin Miller he fights back and what happens he wins the minute he stands up and says wait a minute you can't do that you've just broken well I don't care how much money you have I don't care how many politicians you have in your pocket I don't care what the Supreme Court has said you have just broken labor law and they go oh and they back down and then he realizes wait a minute maybe I've got more power than I realized and so he goes back the next year and he says from now on we're going to we're gonna or we're going to negotiate through a collective bargaining agreement and they go okay and he wins that round and then he says I want arbitration for grievances and for salary disputes and they go okay and he wins arbitration for salary screws and won over the years as he's head of Union the the baseball version he wins one concession after another and slowly transforms this union until he wins the biggest prize of all which is free agency he finally wins the right of a player after serving a certain number of years in the league to be able to negotiate for himself what play what team he plays for right the single most important moment in the history of Labor Relations in baseball and what year does he negotiate free agency finally for the players 1975 now here's the crucial thing about all this right over the course of this period that he is utterly transforming the play the face of the game and proving to these previously powerless players that they actually had power and they could participate in the largest of the game he no one thought it was going to be that easy everyone thought it was going to be this long difficult drawn-out attracted battle and the stunning thing is just how simple it all was how easy it was to push at capital and have capital just kind of crumble at one point Miller takes his players out on the strike and it's over something that in retrospect seems incredibly trivial the there was a surplus in the pension fund I'm up the players and the players said look that's surplus why don't you just put it back into the fund and use it to pay for higher benefits and the owner said no absolutely not over our dead body right that is that contravenes every principal bluh-bluh-bluh-bluh-bluh so Miller says all right we're going to strike it's the first strike in the history of professional sports and even Miller this time thinks this one is going to be long and bloody right the owners have dug in their heels this is this is going to be a tough one and he tells all the players be prepared right and they're all they go out there and they're solid and they do the first strike in the history of professional sports and they hunker down for a lost baseball season and what happens after 13 days the owners fold like an accordion boom by giving but there's a wonderful summary of the new york times in the new york times of the strike by leonard cope it is an old sports writer of that era i love this he this is his summary of the strike players we want higher pensions owners we won't give you one damn cent for that players you don't have to the money is already there just let us use it owners it would be impudent imprudent players we did it before and anyhow we won't play unless we could have some of it owners okay now you have to imagine what that what that what kind of signal that sent to all of these professionals around the country who had seen their incomes falling ever since the end of the war right they had seen their money they were making go down and down and their status sink lower and lower and they look over a baseball and they see this guy this little wisp wiry guy with a foo Munchie mustache and a Brooklyn honk take on the most powerful people in the game of baseball and some of the wealthiest people in the country and win can you imagine what kind of an example that set for other professionals who were engaged in a very similar kind of battle right right around the same time that Miller is transforming baseball there's a parallel revolution going on literally up the street the Major League Baseball Players Association was on 42nd Street literally a few blocks away in Midtown there is a parallel revolution taking place in the publishing world and the Marvin Miller of that particular revolution is a man named Mort Jenga and more Janklow is a corporate lawyer he's practicing in New York Eddy has one of his friends from college is William Safire their old college buddies and William Safire is this is a speech writer for the Nixon White House and he decides to leave after the end after the 72 election and he wants to write a memoir and he calls up his friend Mort he says I know you're not a literary agent you've never done anything in the literary world but you're my lawyer I want you to sell my this memoir for me so Janko says I'll write it it goes and he sells the memoir to Lilia model right and then nine months pass and William Safire hands in the manuscript on time to William Morrow and then Jenko gets a call a couple weeks later from the editor of William Morrow and the other says you know what we don't like it we don't think it works as a memoir I'm sorry tell your tell your friend bill that we're going to have to pass on this one and by the way we'd like our advance back now that's the way the contracts were written back then believe it or not the the deal that was struck in those years between publishers and authors was if the publisher didn't deem the manuscript it prep table they got to ask for the money back the claw back the money they'd given you to write the manuscript right it is as if after a year of work and a new job you bus would come to you and say you know what really wasn't happy with your work this year I'd like you to give me your salary back that's the way it was so what mill what gentler decides is that he's going to fight first of all he knows he knows the books not terrible books great he knows the real reason they want to do that is because of a very funny little thing that happened between the time he made that deal with William Morel and the time the manuscript was handed in and that funny little thing was Watergate write that but sapphire was unlucky enough to have left the White House just before Watergate and handed in his manuscript after Watergate and no publisher wants to publish a Nixon book without any mention of Watergate right so they're just trumping up this they trumped up this thing about not liking the manuscript all that was was they'd made a bad an unlucky business decision and he also doesn't like this fact that the way the contract is written between the talent the author and capital the publisher totally is in favor of capital he thinks that's crazy right so he decides he's going to fight so he gets sent to the law firm that represents William Morrow which is firm Greenbaum Wolfe and Ernst and the partner of that law firm as a guy named Morrie Greenbaum and as gentle describes it Greenbaum is one of these classic era Socratic fourth generation German Jews you know with a little Penn Stater right here and Janklow is like off the boat Russian Jew so you can imagine the kind of dynamic between them and Greenbaum just starts to give him a lecture like he's 18 years old bad you know he says you know you have to understand young man you are in it we are in the standards business you can't force a publisher to publish a book you know that's the way this book this business has worked for hundreds of years and Jenko says look I'm not trying to force the publisher to publish this book I'm trying to force the publisher to pay for this book like the contract says right and he said I'm going to sue and you know Greenbaum like the bane on his forehead starts like popping out and he turns to Janklow and said as of course young man if you sue you will never work in down again right some Janklow sues what happens he wins right he takes on capital and capital crumbles and as soon as that happened every major author in town says wait a minute that's the guy I want to be my agent and with that newfound power Jenko goes back and he rewrites the contract so all of a sudden the balance of power between authors and publishers shifts and instead of the author being in the position of just doing whatever the publisher said finally they get real rights right it's the exact same story as the Miller story right the outsider comes in and shakes things up and and sets up on behalf of capital and stare of talent and looks at capital and says the way you're doing things is unacceptable and capital which everyone thought was impregnable crumbles well if you look across American society in the mid 70s you will see versions of this story happen again and again and again there's a private equity investor in the mid 70s called Teddy Forsman and like all private equity guys back then the way he got paid was he set up a fund with all of his investors and he took a 2% or one and a half percent management fee and all of a sudden he wakes up and he says to himself in 1975 I think I deserve more I don't see how I should just work from doing all the work I think I should get 20% of profits to which at the time seemed like an absolutely outrageous request but when he went to all of his investors and said I want not just 2% of manage of management fee i won 20% of profits you know what they said sure right and all of a sudden now every single hedge fund guy in private equity person in this entire country gets 2 and 22% of management 20% of profits in Hollywood same period mid-seventies guy named George Lucas right goes to 20th Century Fox and says I've got this movie called Star Wars you may only know the interest did it but if you are if you do want to make it I have a simple request I would like you to give me full ownership of every single sequel to this movie an outrageous request one that no one had ever made before or of capital in Hollywood and what does 20th spot 20th Century Fox say sure we'll give it to you Zacks a mere supermodel named Lauren Hutton she gets sick of the fact that like all supermodels she's making 60 bucks an hour and doesn't have any kind of contractual relationship with anyone so she goes to her photographer Richard Avedon and they're working at that moment on this camping with Revlon and Revlon really really loves her and she says if they love me so much they ought to pay me properly hey you got to give me a real contract and all of a sudden she goes from making 60 bucks an hour to making twenty five thousand dollars a day right now where did she get the idea for that well this is what she said in an interview last year in vogue I read an article about a sports guy named catfish hunter on the bottom right-hand corner of the New York Times front page it said he was going to get a million-dollar contract I yelled over to my boyfriend and asked how do I get a contract like that now who was catfish hunter catfish hunter was a pitcher for the New York Yankees he was the first free agent created by Marvin Miller's Revolution he was the first millionaire in baseball created by this new age this new transformation the Miller brought about right so you start with Marvin Miller and you go to Mort Janklow and you go to Teddy Forsman and you go to George Lucas and you go to Lauren Hutton and then where do you go from Lauren Hatton back to Marvin Miller and when does it all happen 1975 so what's going on here what is what causes this transformation in 1975 that allows so many different people to start demanding more from the institutions that they that they work with well there's a two economists name checker and hastily well this really lovely paper last year trying to explain this and they draw on the work of an anthropologist named Alan Fisk and Fisk is a guy who famously has argued that when people people use one of for what he calls relational models when they interact with one another so the first kind of relational model is what physicals communal sharing and that's a you know group of roommates in a house who all read each other's books and listen to each other's music and share each other's socks right that's obvious the second model is a quality matching and that's tit for tat so a carpool is a quality matching I Drive your kid to school on Monday you drive my kid to school on Tuesday right the third is market pricing supply and demand we negotiate the terms of our relationship according to what the market allows permits right and the fourth relational model is Authority ranking that's paternalism that's where we have someone who we look up to who we allow to make decisions on our behalf that kind of has that kind of paternalistic relationship to to our rights and obligations and so what this says is we use these models in various ways according to tradition ritual circumstance experience and we use a variety of them right we shift from one model to the other so he says imagine a dinner party you buy the food at a store according to a price that's determined by the market that's market pricing you some of the people you invite to your house for dinner because they have invited you to their house for dinner in the past right that's a quality matching when people arrive you set all the food on a sideboard and they all serve themselves that's communal sharing but they sit in the seat that you assign you decide that you want Mary next to Jim and Jim next to Helen right that's Authority ranking now so in one dinner party we use for all four different relational models now imagine if we just shift the relational models just a little bit imagine if you were to use a quality matching for to get your food what imagine if you just made a you would done a favor for someone at Whole Foods last week and in return they give you some food for their you say you said on me they all advertise Whole Foods on my website and in exchange they give you some food for free right now imagine if you did communal sharing for your our invitations you just said to friends invite whoever you want right let's all imagine if you did a thority ranking for the choice of what to serve you said we're all going to have chicken pot pie right that's it and imagine if you did a market pricing for this for the for the invitations people would pay to come to your dinner party now you could have the same guest list and the same food and the same venue on the same day at the same time but merely by changing the nature of your of your social relations right you have turned a private dinner party into a community fundraiser that's how profound these sort of relational models help profound an impact these kinds of relational models have on the way that we order our universe when you shift from one kind of relational model to another you bring about an extraordinary transformation in the nature of the transaction and the nature of your relationship with the people that you're working with and what check our house we say is when you look at what happened in the 1970s in 1975 that's what you're seeing we had a shift in relational models we went from authority ranking to market pricing right and that simple shift had the effect of fundamentally reordering our world so think about baseball along these lines the really big thing that Miller defeated in his time as the head of the Union was what was called the reserve clause and the reserve clause was a line in the contract that every baseball player had to sign that said essentially that the baseball team that you signed with owns your rights in perpetuity so if you sign a contract with the New York Yankees at the age of 17 that you the New York Yankees own you you cannot play for anyone else the only way you can obey for anyone else is if the New York Yankees decide to fail your contract to someone else essentially it's a kind of legalized slavery you have no freedom of movement and now when Miller comes along in the mid-60s that's what outrages him about baseball that's what he can't believe right he walks into the system and he sieze oh my goodness all these guys I'm representing have signed over their freedoms to the teams they play for and by the way is not just when you do when you sign the reserve buzz it doesn't just rob you of your freedom it robs you of your bargaining power how on earth do you negotiate a higher salary if you cannot play for any other team right the only threat you can make is to quit you can't say I'm going to go across the street and play for the for the Brooklyn Dodgers right because they'll say you can't no I own you in perpetuity so he tries to explain to the players right do you guys realize what you've done by signing this you have made it impossible to ever negotiate a proper contract do you ever get paid for your true value and the players don't get it and that's what he's been he's beating his head against the wall in the early days what he's trying to do is to convince the players to see this right to see the extent to which they are being exploited by this by this system well why don't they see it why is it so hard because they are in the grip of Authority ranking because they have used that relational model to define their terms of engagement with the owners they have decided look this is paternalism the owners take care of me they buy my steaks after dinner they slip me $20 when I play really well they allow me to play second base and they clean my union uniform after I'm done this is a great system right I get to do the thing I love play baseball and they do all the worrying about how much I should get paid and where I should go and what Miller is trying to do is to get in the ship to market pricing and that's a really hard transition it seems simple but in fact it requires this extraordinary leap from one model to the next now if you look how what was going on in the professions prior to 1975 you see authority ranking all over the place that was the the reason why professionals were getting paid so little in those years because they were passively adopting a set of standards and expectations that was set by the institutions that they worked for this is wonderful book I read two years ago by um Charles Ellis it's a book about Goldman Sachs history of Goldman Sachs he tells a story of Sidney Weinberg who is the guy who really builds that firm into the Colossus that it's become he runs Goldman Sachs from 1930 to the end of the 60s and is an incredible passage which I'll never forget which is that Weinberg is in the mid-50s he's tapped to lead the initial public offering of of the Ford Motor Company to take Ford Motor Company public it is the biggest IPO in history up to that point and if you adjust the dollar amounts it's the biggest IPO of all time it's an incredible when we're talking about Ford at the height of its power right it's it equivalent of Microsoft and IBM and Apple and Google going public simultaneously by a massive thing and they want Sidney Weinberg and Goldman Sachs to do the deal to represent them so there's his the crucial passage when Ellis is describing what happens in that deal when Henry Ford had asked Weinberg at the outset what his fee would be Weinberg had declined to get specific he offered to work for $1 a year until everything was over and then let the family decide what his efforts were really worth far more than the actual fee Weinberg always said he appreciated an affectionate handwritten letter he received from Ford which says along with other flattering things without you it could not have been accomplished Weinberg had the letter framed and hung in his office where he would proudly direct visitors attention to it saying that's the big payoff as far as I'm concerned he was speaking more literally than his guests knew the fee finally paid was estimated at the time to be as high as a million dollars the actual fee was nowhere near that amount for two years work and a dazzling success the indispensable man was paid only 250,000 dollars now let us go over point by point that surreal packet passage from just fifty years ago one he asked for a dollar a year is there a banker on the face of the earth today who would agree to be paid a dollar a year at the outset of a transaction and just let the client give him whatever bonus he wanted right to a thank you note is there a banker on the face of the earth today who would say point to a thank you now handwritten thank-you note as well and say that's the payoff as far as I'm concerned point number three two hundred and fifty thousand dollars for handling the biggest IPO in human history today that fee would be I don't even know other many bankers in the room not maybe 250 million maybe two billion I don't know I mean today it would be many many multiples of that that fee is so low it's unbelievable it's I mean it's mind-boggling that you could work on a deal the biggest deal in history for two years and get paid 250 grand and not complain about it you know think about this gentleman Weinberg is the most important banker of his era he is the single most powerful man on Wall Street he did that deal because Ford came to him and begged for him personally to handle it he has all of the negotiating power in the world right today in that same position he could have cut the most lucrative deal ever given an investment bank in history but he doesn't on why doesn't he because he's in the grip of authority ranking because his assumption is it as an investment banker he works for the client he works for for and he is obliged to take whatever for gives him right whether it's five dollars or five million dollars and whether it's a pat in the back or a handwritten note what has changed today in that world is not simply that there is an extra zero or two zeros on the end of any one of those deals what's changed today is that investment bankers are no longer in the grip of authority ranking right now they believe in market pricing they assume that everything's up for negotiation and that's exactly what the nature of that transaction that disagreement was between more Janklow and maori Greenbaum maori Greenbaum assumed as he you know glared at his Benson a he assumed that the order of the social relations in the publishing world was a thorough knee ranking right that the social relations were settled that everybody was an agreement on that's what the model was and general is saying no it's not settled let's do market pricing right I think that's fair that's what that disagreements about and when Teddy Forsman comes along and says I want 20% of profits not just 2% of fees under management he's not saying that because he's somehow more acquisitive or or rapacious than other equity fund managers who come before him it's because he's got a different model he says why should I just passively accept the terms that investors had been offering for years and years and years it's open to negotiation I want 20% and if you say yes great and if you don't no big deal go somewhere else same thing a Lauren Hutton is saying she's saying why do i why should i passively take 60 $12 an hour if Revlon likes me so much they gotta pay for me right I'll work for them but they ought to pay what I what I what I'm really worth in this marketplace which is twenty five thousand dollars a day and she gets twenty five thousand dollars a day well that is the modern Miller Revolution he's bringing market pricing to places where market pricing had never been considered as an option before so to the crucial question and that is is this a good thing are we better off for having transformed the professional world by using the prism of market pricing well in one sense the answer is yes of course we're better off right the old system was exploitation there's no reason why the baseball owners should keep all the money or why Ford should get away with paying peanuts for that IPO or why Lauren Hutton should work for 60 bucks an hour and that's that that is them that is the the great part the powerful and useful and lasting contribution that Miller makes is he begins to even the scales to make sure that society properly appreciates the contributions of people who have exceptional abilities but there's a another part of this that's more complicated and that is that what Miller was doing is he was taking a model that had been tried out in the world of organized labor right market pricing and an end to Authority ranking is what the trade union movement was all about right that he they figured out way back when 50 years before the professionals did that if you organize collectively and if you were consistent and stood firm in your demands you could get a lot more money right and the history of the steel workers and the auto workers in the Teamsters through the 30s and 40s and 50s and early 60s is a testament to that fact and what Miller does is he says look this idea worked so well in the ranks of the working class let's try it in the professional class and so he convinces professionals to think in that moment like trade unionists right to understand that let's test our pay in the marketplace not according to some kind of custom or ritual but the thing is there's a huge difference between trade unionism in the working class and trade unionism in the professional class people who are in trade unions are people who don't have significant financial or social resources they're people whose skills are not necessarily exceptional to people who can be replaced by their company if they threaten to walk across the street they need that kind of collective organization in order to have a fair fight with capital but professionals are different they do have significant financial and social resources they do have exceptional talents and when they threaten to go across the street it's a real threat because they're really really hard to replace and so when they organize collectively is not a fair fight anymore it's a route on what happens in baseball after Miller brings about his revolution is around all of a sudden talent doesn't goes from making this much to making this much right the share of baseball unions of baseball revenues given Oh - players salaries goes from 10% in the 60s to upwards of 60% by the early 1990s Barry Bonds that little boy who was playing at his father's feet back in the early 70s makes 22 million dollars in 2004 which is not just more than his and father's entire team made in their entire career combined that's more than many owners made in 2004 that's the big question left by Miller's Revolution and that is in bringing about this transformation and then bringing about market pricing do does the balance tip too far in the favor of talent of talent and when you look around and you see that growing gulf between the top 1% of this country and the rest of us and you see that widening inequality and you see the extraordinary salaries paid by people on Wall Street you have to ask yourself is this because of Miller's revolution is this the unintended consequence of freeing us from the shackles of authority pricing you know when Robert Nardelli leaves Home Depot a couple years ago when he is I should say forced out by the Board of Home Depot because they were unhappy with its performance he takes home a severance package worth 210 million dollars now why does he take home that much money because he wrote that into his contract when he was hired and why on earth would you write into a contract when you hire somebody that in the event that we forced you out because we don't like you and think you're terrible we'll still pay you 210 million dollars why because that's the situation a capital is in now they can't say no to talent anymore it's not a fair fight it's a rout you have to do what talent says even when it turns out the talent isn't all that talented you know the problem with the old system of authority ranking was arrogance at people at the top people who were in that position of authority abused their privilege and made demands on those who work for them that were outrageous but the new system has a problem as well and that's greed that people who has this kind of power to demand salaries demand far more than they should there's a wonderful phrase that Roger Martin says he says we have the professional class has gone from asking the question how much is enough to ask any question how much can I get when I was talking with Marvin Miller I was reminded of this famous story about Stan Musial and Stan usual was a player who came along in the generation before Marvin Miller and he was one of the great baseball players of his era and one season he has so late in his career he has one of his worst seasons as a baseball player terrible season he hits 75 points below his average and so he goes to the owners of the st. Louis Cardinals and the general manager of his team and he says I think you should cut my pay by 20% he was making a hundred thousand he said I think I should you should cut it back copy back to 80 percent now I know what Marvin Miller would say if you told him that story he'd be outraged by it he'd say first of all at a hundred thousand dollars usual was being underpaid by several orders of magnitude he would also say and do you really think that if usual had the greatest career of his season the team would have turned around and given him an extra twenty percent no way right and in both cases Miller would be absolutely right in pointing to the fundamental unfairness of that system but it's really hard to look around today at all of these billion dollar pay packages of hedge fund people in all the private jets landing one after another at Teterboro and the massive palaces being built by the new princes of our gilded age and not feel just a little bit nostalgic for what Musial said when he was asked to give an explanation for why he asked for that pay cut it has been a very long time since anyone any kind of talent said something like this usual said there wasn't anything noble about it I had allows a year I didn't deserve the money we have um we have time for questions I think there are microphones at the top of the aisle and I would be happy to sure good I like coming to listen to you and it's a little bit of an event and I think of you as a little bit of an icon as well coming here and compared you somewhat to Steve Jobs who's also an icon at richer yes and so your talk is like well is it going to be like the next iPhone that's how I think of your next talk so I'm wondering what kind of pressure is there in coming up with the ideas for your next talk Oh what do I have neuro C's involved in the thinking this up well you know anyone who is in a creative field is aware that you never never escape the anxiety about whether you where the next idea is coming from or if in fact you'll ever have another idea and we were yesterday I was doing up a I did a talk with Bill Simmons the squash writer at the festival and we were talking about this whole question of how long do you have I how long how long a stretch to create people have where they can perform at a high level and Bill was arguing that it was nine years I don't know where he got number nine years but and I was there thinking when did I start and so I think I'm I'm probably outside of my envelope so what I'm saying is this all downhill from here that was great so what do you attribute the willingness of capital and perhaps the willingness of the masses to change so dramatically so quickly to market-based pricing yeah well this is an interesting question there's a number of different Roger Martin whose work I mentioned he wrote this piece for the Harvard Business Review and his argument is it's both a change in sensibility that is to say talent changes its position but there's a fundamental economic piece as well which is that the reason capital had such power for so long was the capital was scarce there wasn't a lot of money the big thing that that if you had access to capital if you could put together money to buy start a business you were in an incredibly powerful position because very people had at that kind of access and what happens in the 60s is the amount that kind of pooled money available for new business ventures grows dramatically and that means that destroys the bargaining position of those who organize pools of capital so in baseball he would say correctly that Miller comes along precise at the time has the television revenues for the baseball are exploding and it becomes really really hard for the owners to claim that they get 90 percent of everything when the pot is suddenly ten times larger so there is that piece of it and that's happening simultaneously in all kinds of different worlds you know that there there's a creation of a mass market in the 60s that allows talent to cash in but I think it's very important not to give it just simply a structural explanation that I do think that that the shift from one relational model to another which seems inconceivable like when you're trapped in authority ranking you can't even conceive of market pricing but the minute you see at work authority ranking just kind of vanishes you can't go back right it to me it's a good example of when does discipline in a classroom break down when authority ranking disappears and you go to market pricing or when you go to I mean any number of the other relational models in a classroom are disastrous communal sharing quality matching if you're not good ways to so I just think there is that I just think there's something so dramatic about that change in perspective and it just kind of it just runs through the professional ranks like a contagion in 1975 I have two questions for you one 1975 is also the coming of age of the very beginning of the baby boomers and very close to the Year 1977 when Marshall McLuhan made the very famous statement that it used to be in America that when someone would notice that someone was able to get a son or a daughter into a position by connections as opposed to talent people would be outraged people would stand up in and protest whereas as of 1977 people were saying how could I get my son or my daughter into that so he was seeing a destruction slow destruction of values in the United State the second question I have so my first question is how do you relate this excessive emphasis on talent and the power of talent to the minami baby boars coming of age and secondly that generation is now heading into retirement and some of them are already there what do you think the next generation of Americans are going to present as a model for not only the market but also for human values yeah two good questions to the first I'm going to answer it narrowly I do think there's obviously a piece of this it is not coincidental that all this happens you're right as the baby boomers are gaining positions of authority in the workforce the middle of the me decade more crucially though I remember asking middle of this I said you know the arguments he was making about baseball players and their rights were powerfully analogous to the arguments being made in the civil rights movement of the same era of the 60s and so I said I remember asking like well is that was that shoo did you find that the black players in baseball were more open to this message than the white players he said absolutely in fact he began to list so many of the key figures in the baseball union were were black and they absolutely saw a connection between their okay oh the broader a much more important struggle in society and this little microcosmic struggle on that they were involved in so there is a kind of leakage of values of values from outside into these professional ranks the other questions really go into what kind of relational model do we think that people will hold today I suspect that what we still have a talent focused model but what talent wants today is not to get paid because I don't think they I think they realize they can't get paid in the same way I think what they want is to be free in a sense of what they're looking for is autonomy is the freedom to do to behave as creatively in in whatever ways they wish without the constraints of institutions or that's the kind of gear that's their version of the market pricing paradigm trade the money yeah cuz going to express himself yeah cuz no one I mean the generation that's 25 and below are making in many cases a fraction of what their predecessors made now cycle is not coming other way because money is gone - okay you describe it as kind of a paradigm shift from the authority ranking to the market pricing model I was wondering if perhaps there are all of those all of those paradigms were were happening simultaneously not just not just from from A to B because for instance you've got CEOs who are on confidence you know who are now also on the boards of the companies and chairmen of the companies and on the compensation committees for the companies are they doing Authority ranking for their own salaries is it a equality matching for their fellow you know for their cronies on other boards and things like that yeah no you're right so it gets tricky and then this some version of my will appear in the magazine and I deal with these article that with your point a little more I flesh it out a little more in in the magazine but I think you're right so what happen what happens to market pricing is it that would say CEO pay is it gets completely corrupted market pricing assumes that there is a negotiation between relatively equal parties and what you're seeing when Nora delegates 210 million dollars for being fired that's not a negotiation that's a capitulation right so we move beyond and when it is a study that I cite which is a study that tried to said what are the predictors of excessive compensation for CEOs and it turns out that how much you make as a CEO has very little to do with the nature of the business that you're in or with the success of the company that you run but it has everything to do with the average compensation of the members of your compensation board on your board directors in other words it's all about the reference point that the guy is setting your salaries have for their salaries that's you quality matters yeah that is a quality matching yes so there is a kind of the paradigm gets corrupted again once you move into these rarefied circles CEO compensation circles so it's what's funny is how briefly the market pricing paradigm rules before it gets corrupted again maybe there's me it is clearly a kind of cyclical process in which we move in the commercial realm from one of these paradigms to another depending on the self-interest of the most powerful party I discovered that there were tones of what you said that were similar to the recent article written about the new book about sarrish Diaghilev strangely enough and the power that he wielded at that time but my question was really more of one of esthetics and related to baseball which is how far does the full quote attributed to Branch Rickey of which only the latter half is often cited how far do you think that affects things that you've been speaking about where intelligence and effort combining at their best equal the residue of design oh dear that's a difficult question what what is the what is the I'm sorry what is the half of that quote that we often what is there a second half of that quote that is it's supposedly when someone when the Dodgers won the World Series yeah Jackie Robinson they asked him don't you feel lucky today and he said luck is what happens when intelligence and effort combine at their best luck is the residue of design oh I see yeah yeah oh that's interesting I've never I've never heard that that particular quote Rickey interesting around the it is it's it is an interesting question about whether the integration of the game is a kind of precursor of of the of the of Midler's revolution a generation ahead because once you basically bit-by-bit the notion of baseball as the kind of private fiefdom of a set of owners that is run according to their whims however racist or they might be is broken down bit by bit and the first barrier that falls is you explain to the owner that actually you are you are obliged to look for people who are great baseball players wherever they may come from my teams they come from places and then the second thing is you are obliged to pay them properly right once you have so there's a kind of there is this continual process of rationalizing the terms of the game and we forget how how appallingly retrograde labor relations were in that world I mean it's really quite astonishing even more astonishing by the way is that Marvin Miller is not in the Hall of Fame if you remember the Hall of Fame the criteria for entry to the Hall of Fame is impact a contribution contributions made to the game of baseball there is no one outside of Babe Ruth and Jackie Robinson and made a greater contribution to the game of baseball in the 20th century than Marvin Miller they put announcers into the Hall of Fame guy the guy who said holy cow is in the Hall of Fame right Marvin Miller who changed this I mean and this man is sitting in his apartment you know up in the on the east side he's the only guy who didn't get rich right everybody else made millions and millions of dollars he never made more than his Union salary nor did he ask to make more than is Union salary when he was asked if he would serve up on his retirement as an agent for the players he said no why because he felt it would be wrong and a violation of his position as a union man this is a man who selflessly served the interests of the game of baseball wrenched it single handily into the modern era and how did they reward him by turning their backs on him why because to this day the owners are a retrograde group who deserve I mean I almost feel there should be a day every year we're all Americans boycott the game of baseball until they come to their senses and put this man where he belongs which is alongside the Great's of the game in the whole thing thank you um just it seems that the market model is based off of scarcity and to what extent do you see a sliding scale between authority figures market pricing where if the position of scarcity changes it's just a new you know through looking glass version of authority oh yeah when it goes to what the I was talking about with the previous question from that side which is that these paradigms start to get really fluid we we sort of cycle through these different versions and depending on who is who is in power may I suppose that is the biggest change what happens perhaps a better way of explaining the shift in 1975 is in 1975 the social relations were set up until then were settled that is to say we had Authority ranking and nothing else and a predictable set of characters at the top of the system the publisher ruled right and we knew who they were and we they were like five houses and they dictated terms to everybody and then what happens in 75 is that it's all up revs that sometimes the publisher can rule according to authority ranking or some other paradigm but sometimes it can be somebody else and in various times maybe that's a pure way I think of of explaining this transition that we've we simply that in terms of open negotiation it is not simply the money at being paid that's up for grabs it's also the model we're going to use to decide how the money is being paid that's up for grabs that's a better way to rephrase it sure um I'm sorry your parents couldn't be here today I am too I hope they're well they're very well they're they just decided I think there's a certain point when they know where this is headed right so they're like you know how many of these talks can be realistically be asked to attend um so I found out recently that we have a common ancestor um John Ford oh my goodness and when I posted on Facebook oh I'm gonna go see cousin Malcolm someone told me about the PBS documentary faces of America and I got to read your chapter and I was wondering oh thanks for bringing to light the whole mythology that I was brought up to believe about my father's side of the family so thanks for that I was wondering if you were going to write any more about that oh um well I don't know what um I sort of feel that uh you know you you know those people who write a memoir and then it does really well and then they write another memoir and then they write that as well so like you know that okay they come up with a third memoir and so that the first one spans you know this much and the second one is like this much and then the third one is like the time that elapsed between their previous memoir there so there are diminishing returns to any kind of personal writing and I think I'm at the point of diminishing returns I think I have clearly exceed every interesting fact about my family and my own personal background so it's best I think that I move on to more fertile pastures Thanks thank you um I'm a public school teacher so when you spoke of paternalism I immediately thought of my classroom but then it occurred to me that the entire New York City school system of school systems around the country or in my opinion built still on paternalism and maybe even some community sharing and I feel like a lot of the school reforms that are being talked about have to do with the market and I just wanted to see what your thoughts were on that and if that was a positive or negative thing yeah I was such an interesting question you're right I hadn't thought about it in that way that there it is a lot of what is called for better or worse education reform you're right is an attempt to bring market pricing to some corner not the hope if some crucial piece of the I will say you know I am in in part I think those can be very that can be very very useful or at least I'd be willing to experiment with it but I also say that you know the Canadian in May is very suspicious of attempts to completely transform public goods into market-based systems you know the best example of all this is the continuing nests in the healthcare system in this country is in large part due to the fact that we persist in trying to use a market pricing model where it's not appropriate I think I mean Canada we use a what would it be it would be a communal sharing model for our healthcare and I strikes me and most countries do question country suit and I strike me that some more appropriate so it requires you to you know the the reason that the health care debate in this country never really got off the ground is that no one ever took a step back and examined the social relations paradigm we were using to organize the reform what did we want right did we want a system that that provided every American with an equal chance for a decent amount of health care that is a communal sharing model that was the Canadian choice now that means you sacrifice all kinds of other things the kinds of things you can only get with market pricing which is really really high in services for the wealthy which you can't get in on Canada the limited access to it doesn't matter how rich you are if you want to get a certain kind of access to some SuperDuper expensive something something you go to Buffalo right might be the only circumstance but you go to both yeah but um I say that is someone is very fun at Buffalo high but that's a you know and I think that you you're right in the sense that as we go through as we think through what we want to happen with education I would love us to have that kind of conceptual discussion about what paradigm would is most appropriate I will say that I do not I believe that the market pricing paradigm that is used for elite higher education in this country is completely bankrupt it's absurd when you're paying 80 grand to go to NYU I mean that's a failure of a as the failure of a system right there so it's a good question um what do you think explains the the fact that Americans don't resent incredibly wealthy obscene level of wealth thing that you were talking about and what are the conditions under which there might be more sanity brought to CEO level yeah you know insanity I'm just curious you mentioned that the tax rate of years yes fascinating the tax rate thing is actually is so bizarre so think about it the top rate income tax rate in through the early 60 through the candy Johnson tax cuts and and actually through the mid fifties or so is that a 91% on incomes over 200,000 so that translates that's roughly two million dollars in today's terms so what they're saying back then was you can't make more than two million dollars right as a society this country in the mid 50's said you can't make in today's dollars you can't make more than two million and where and what happened as a result of that well I mean America went through first of all its greatest period of economic growth ever it was the unacknowledged leader in the united states the social fabric of this country was with respect to income inequality fine right I mean you can't point to something that was wrong with America the 1950s because they said you can't make more than 2 million right now what's amazing about this is if you even bring this up now people don't even believe you that that was in place 50 years ago Adam gopika at the New Yorker did this town hall thing in May so disastrous Adam and I so every night again we do these things that we we do we did it at the 92nd Street Y right we get on stage a really Yap about stuff now we're used to the 92nd Street Y which is all you know what that audience is right I'm sure it's a lot like the audience here so at the 92nd Street Y you can talk about how taxes in 1950 were 90% and you can talk about whether that was you know with that mint in blood over so we were invited to do a similar kind of thing in Naples Florida I I did not know but maples floor I thought Naples Florida was a kind of extension of the Upper East Side of the Upper West Side how wrong I was so here we are up on stage me and Adam mmm forget that you know it's like and we bring this up and people started kissing me properly I think hurl they're kind of dinner buns at us I mean it was like I was like women we make this up this happened you're here was a room full of kind of Republican retired millionaires right their parents paid that kind of tax rate and maybe they are upset about it but they didn't form a tea party and jump up and down about how they were doing turn into socialists they understood that their country had given them and men an enormous contribution to them had made it possible for them to succeed they also understood that their country had incurred certain obligations that had to be paid for and that as the wealthiest people in the country they were the ones best positioned to help pay for that and by the way two million dollars is a lot of money but you can actually live a nice life on two million right it's only today that we have completely abandoned sense of proportion and you know people like this is the most extraordinary quote it was from Stephen Schwarzman the private equity who remembers this this is a guy who made about it I don't know a billion dollars last year and a member because and my accountant is here he can correct me if I'm wrong Don Cartman come on Stephen Schwarzman pays capital gains on his money because he says the money he takes out of his investment pool his capital gains and not income so he pays 15% on not 40% right when there was some move in Congress to raise that to make him pay normal taxes right remember he compared it either to Kristallnacht or the Nazi invasion of Poland which is by the way the most obscene thing ever to come out of anyone on Wall Street's mouth in the last ten years and by the way the bar is really high for most obscene thing right that is how when people are saying that with a straight face you realize that we're just completely off the rails right I feel like I want to put him in a time machine move him back to 1955 and sit down with him as he files his tax return I think that having just knighted I would pay a billion dollars for that privilege sure so how did how did a Miller connect with the Baseball Union I mean from your talk it seemed like the players were somewhat were I'm not happy but we're okay with the situation and kind of like Miller came in and opened their eyes but how did he actually get to the dog was there a grief players who asked him did he did he apply it's a it's a great story so Miller is he's this senior guy at the steelworkers and he's very well-respected in the in the union movement a labor movement and the players are shopping first understand that they have a problem but their problem they're concerned about very very narrowly with their pension they think the owners are trying to screw them on the pension and they understand that as presently constituent constitute can stitch you whatever they can't they don't they don't trust them they don't think they have the organization necessary to protect the pensions they're looking for new leadership and as a guy called cannon hoo-wee is basically a he's the is the owners person he's the owners stooge and the owners are trying to push Canada on the players and a couple of them I forgotten the names but some of the most of interesting players of that here a smarter poser I've become suspicious of Canada and so I'm looking for outside candidates interestingly enough the first outside name they come up with is Richard Nixon and when they first approached and then anything I don't know maybe Richard Nixon we better as the general counsel the players union because remember this is 66 he's practicing at Mudros in on Wall Street he's not yet run for president so they go to Miller he could imagine they go to middle and I say we would like you to be the head of the Players Union and we'd like your general counsel to be Richard Nixon now from what I've told you about Marvin Miller you can guess his feelings about Richard Nixon right they're not warm and fuzzy so he said to them very very flatly that's not going to happen but you've got to have me or you're going to have Nixon but so they were but there was a kind of they had no idea what they were getting into they were and they were simply thinking about pension hadn't made the kind of leave this is incredibly serendipitous from their standpoint this incredibly serendipitous hire trick I think one of the people behind it was Jim Bunning who's Nelson is right from Kentucky that's Republican yeah by the way up I don't know if you ever asked no or this but what does Miller think about the world that he kind of helped usher in the changes because it seems like the rise of his baseball using roughly parallels parallels the collapse of the steel worker Union and all that movement yeah I don't know the answer to that question I mean we had a very long conversation and I don't know whether he I think I am I see him in a curious way I see him as being a much more important figure that I think he sees himself I think he sees himself as doing what any Union man would have done in that situation and I think he thinks all he did was apply the principles that have been worked out over the previous 50 years in the trade unionism to a new field I don't mean there's a there is something incredibly kind of self-effacing is in his understanding of his of his role so when I kind of pressed him to kind of connect what he was doing in baseball to the larger world around him he was reluctant to make that connection for that reason I think and and if you read his book which by the way is it's such a great book I mean it's just it it is a marvelous history of that era he never he doesn't go that he simply confined himself to the story of the players and he saw himself as you know his job was to get the biggest bite at a Capitol on behalf of his members that's what you do it for you man right I don't think he ever kind of goes beyond what one mouse question and then I will you're the last well first of all I want to thank you for all your books they're really transformational and brilliant and I've really enjoyed all of them um my question is totally unrelated to your topic today night I don't have to ask if it's that if it's going to shift the whole then okay you're probably an appropriate closing note okay well it's about your observations in blink oh and you observed in your afterward how the advent of everything that is thrown at us through the inner in the internet and all the information that is thrown at us now how that inhibits our ability to quickly make decisions and you can articulate it much better than I am sure but probably I'm sure everybody knows that the premise of blink my question to you is how can we as educators of children who are immersed in this this this lifestyle now is it's a way of life how can we teach them and remind ourselves as a matter of fact how to to to rely on those instincts yeah how do you turn off the I don't know I mean I you know if I had an answer to that I would be I wouldn't be here would I be there some position of great authority in power but um when I suppose the the the the answer is you can we can we create for people on places of cognitive refuge other words other are there places we can create for people where they can go and be have time for sort of reflection and and and process the enormous amount of information they have accumulated I mean that's the the for every moment you spend gathering information I think you ought to spend at least two moments making sense of it and in in a perfectly kind of ordered life those two things are in balance I think you're right is they've gotten a little bit up unbalanced and so maybe sort of on an institutional level you know whether that means taking teenagers and you know incarcerate them for a short period of time kidding but no you know it's very interesting there's a lend on this note this is my favorite random fact from studies of high achievers there's a wonderful study done years ago that looked at a whole range of very very very creative people and discovered that they're trying to go what do they have in common the answer is almost nothing but the one thing they all had in common many of them was that an extraordinary number of them were bedridden with a serious illness during childhood late childhood or early adolescence and you know this is sort of you can say it's a coincidence it means nothing or you can say they were forced into a period of extended reflection and when you are someone who is has the capacity to be enormous ly creative if you are if you have been taking in lots of information for a long time and then you're forced to go off in some centrally deprived environment for an extended period of time maybe something wonderful comes out of that of course the first thing I did when I read that as I tried to find to think back and was I ever and of course the answer is No hoping at at some point I will suffer debilitating illness that will transfer me to the next level but thank you

Channel: The New Yorker

Views: 201,808

Rating: 4.6958361 out of 5

Keywords: Festival 2010, Malcolm Gladwell, income inequality, festival, nyer festival

Id: iKvFlSedpNI

Length: 90min 38sec (5438 seconds)

Published: Tue Jul 22 2014

Reddit Comments

[u/yowtf]

hegemony not hedemony