NOW with Alex Wagner | June 12, 2012
>>> a new report from the federal reserve shows the recession wiped out 20 years of personal net worth , threatening to turn the american dream into the american debt. the median wealth of the american family fell 38% in just three years, matching a level not seen since 1992 . the report showed the middle class bore the brunt of the economic hit with the middle 60% of the country seeing the greatest losses. the top 10% actually saw their net worth increase. chris hayes , you have a new book out, "twilight of elites." if you don't see an uptick in amazon sales at 1:05 p.m ., i failed. one of the themes of the book, you were talking about income inequality . i want to read an excerpt. we largely ignore the effect of extreme inequality that is in the long run the most destructive. the way it makes those at the top of the social pyramid worse. for this reason, extreme inequality produces elites that are less competent and more corrupt than a more egalitarian social order would. this is the fundamental outcome that several decades of failed production have revealed. as american society grows more elitist it produces a lesser caliber of elites. all the data and all the trend lines point towards less of an equal society, greater income disparity , how do we reverse that trend?
>> well, i think we need to reassess some of our basic intuitions and tacit assumptions about the way american society should work. i think we all buy into this vision that says the best and smartest from all walks of life, gay and straight, black and white , male and female will get funneled through this process and ascend to the heights of the pillar institutions, whether wall street or washington. i think what we found is inequality means those folks making the decisions get more socially distant from the people that those decisions affect. that makes them worse decision makers. you raised a great study from the federal reserve which is a fascinating institution for all sorts of reasons. one of the things the federal reserve did during the housing bubble was completely miss the housing bubble . they had meetings with people who were saying there is craziness happening in the subprime market. i talked to the center for responsible lending in raleigh-durham and they were working in a community in which you had 70-year-old grandmothers who had a home equity loan , were getting foreclosed on after owning for 30 years because the predatory nature of the loan and that information was not being conveyed to the people at the top. so there was this profound disconnect between the way the subprime market was operating and the people at the bottom taking out the kind of net wealth we saw in those numbers --
>> most of that take-down of american wealth is because of homes being underwater, the mortgage crisis , et cetera .
>> you get this disconnect and when you get disconnects like that, one of the amazing intuitions our founders had, one of their big complaints was the distance of the king. there's this line in the declaration of independence which we don't think about anymore which says aside from the other things the king's doing wrong, he keeps dithering with decisions and then he makes them wrong. the idea that being making decisions need to be imbedded in the system that those decisions affect. that's the genius of democracy. the more unequal our social order gets, the less we are able to achieve that.
>> you talk about, when talking about elites, i have to bring in the op-ed which would seem to be a rebuttal to many of the points you make in your book. it says then there is our fervent devotion to equality, to the notion that all people are equal and deserve equal recognition and respect. the common assumption is that elites are always hiding something, those people at the top are nowhere near as smart or as wonderful, as pure as all-knowing me. he ends with i don't know if america has a leadership problem. it certainly has a followership problem. i will let you respond but i also want to bring in -- one of the examples used is occupy wall street . that's an example of the incredibly self-important crowd, not partaking in the political system and fundamentally, this mistrust of institutions has not created better institutions because people aren't buying in. it's not because the people at the top aren't doing very well but because of the followership problem.
>> occupy wall street is interesting to me because i always felt there were two stories going on there. one was the actual physical movement itself, the people who were camped out and some of them who are still active in that movement. i think it connected with something much broader than that. it's people who would never come to new york to be part of that, would never take part in their city but who the idea, i think the idea in the wake of the melt-down, it's finally kind of occurred to them what inequality actually is, how they actually fit into that picture, how their personal situations fit into that. i have seen these polls before where you start asking people about the distribution of wealth in this country and you say, you know, roughly what share of the wealth do you think the top 10%, 5%, 1% own. people do not know this.
>> vastly underestimated.
>> they always get it wrong.
>> yeah. one of the things i think that's always interesting, i disagree with david brooks on a variety of points he makes in that piece, mostly because we may pay lip service to equality but we actually aren't that committed to it. we do believe in the model, we believe in taking the people who are the smartest and putting them in charge of things but more than that, one of the things that's really fascinating about the data you just showed, who got hit the hardest from their wealth. it wasn't the poorest people. wasn't the working class . it was the middle, upper middle class who have seen their prospects dimmed and that's when you're seeing radicalization among that socioeconomic demographic. if you look at the tea party , and some folks in occupy wall street , a lot of that is frustration and betrayal from people who have degrees, are kind of upwardly mobile and have professional aspirations.
>> also, it's important to note, pew also has a study on average income between 2005 and 2009 . white incomes are down 16%. hispanic incomes are down 65%. african-american incomes are down 50%. you talk about a sense of disenfranchisement with the electoral process , talk about turnout in november. these communities have been disproportionately hit and yet, i think the blame lies really on both sides of the aisle here. the president has made no particular effort to reach out and stanch black unemployment and the black unemployment crisis.
>> he has been very -- you can make the argument, the argument the white house would make, this is the argument when you bring up the specific racial questions, that everything we're doing is for everyone. that the recovery act helped black and latino families because it helped the economy as a whole, particularly helped people in the bottom, affordable care act helps black and latinos because medicaid expansion, getting people coverage. but it's true that he's been reticent to talk about it in those specific terms and i think, look, when you look at those numbers, it's been a rough decade in this country. this mood of betrayal and distrust and kind of dyspeptic discontest, 2006 , throw the bums out, 202008, throw the bums out. figuring out how to navigate that is the president's