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This is the story of how a small but powerful elite conspired to rig the system by turning the American economy into a casino where they would always win, while the rest of us lose.
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00:09Let me ask you, what's happening in this country?
00:12Who owns it?
00:12Where's the money?
00:13Who took it?
00:14Rochester.
00:16Rochester?
00:17You mean like in the burbs here?
00:19Oh, you're thinking small.
00:21Do you ever feel like all you do is work, but never seem to get ahead?
00:25I'm thinking the money's in the Cayman Islands.
00:27Yeah.
00:28GM not paying anything.
00:30Amazon not paying anything.
00:32Stock market's like this, and nobody here got stock.
00:36How the fuck is the stock market doing this?
00:39And there's nothing in here.
00:42Right?
00:43Like the system is set up for you to fail.
00:47It doesn't make any sense.
00:49There's a record stock market.
00:50Who the fuck's buying a car?
00:52Look at my raggedy-ass shit.
00:54I'm not buying a car.
00:56You're right.
00:57It's a rigged game.
01:02For over 70 years, our leaders have told us one thing under the bright lights.
01:06The protection of the lives and property of Americans is the responsibility of all public
01:12officials.
01:13I care.
01:14We're trying.
01:15We have it so well under control.
01:17Help is here, and we will not stop working for it.
01:21But for decades, America's shadow government and its powerful friends have spent trillions
01:26of dollars on an agenda that serves their interests, not ours.
01:30You guys paid for all this.
01:32So when the shit really hits the fan, we're on our own.
01:36This is not science fiction.
01:37This is reality in America right now.
01:40Truth is, the rich and powerful will do whatever it takes to save themselves while the rest of
01:45this time has died.
02:01For years, nobody could figure out how Jeffrey Epstein afforded so many luxuries.
02:06A high school math teacher who lied about his degree and was fired for poor performance
02:10and then fired again from his job at an investment firm.
02:15But behind these doors, Epstein hobnobbed with some of the richest and most powerful people
02:20in the world.
02:23Sheiks from the Middle East, great intellectuals and thinkers and businessmen.
02:29Epstein sort of had like a Svengali-like hold over some of the wealthiest, most powerful
02:38businessmen in the country.
02:41And somehow this didn't change, even after Epstein was convicted for having sex with teenage
02:46girls.
02:48How did Epstein translate this incredible access to power into his personal wealth?
02:54Some speculate he secretly worked for intelligence agencies.
02:57Others assumed he was supplying rich old men with underage girls for sex and getting paid
03:03to keep quiet.
03:04But according to some reports, the secret to Epstein's vast fortune is that he supplied
03:09his mega-rich friends with something they valued more than sex, a way to avoid paying their
03:14fair share of taxes.
03:16The Epstein story is kind of like covering the weather.
03:19Sometimes it rains, and when it does, it pours.
03:22Yesterday was one of those days.
03:24Take Leon Black, the controversial CEO of one of Wall Street's most lucrative investment
03:29firms, his net worth, more than $9 billion.
03:33He once claimed he was being extorted by a Russian model whom he'd given millions over
03:38a five-year affair.
03:40But what really shocked people was his business dealings with Jeffrey Epstein.
03:46The private equity billionaire, Leon Black, hired him to avoid about $2 billion in taxes
03:54using something called a grantor-retained annuity trust, a GRAT.
03:58A GRAT is just part of an arsenal of complex schemes like equity swaps and offshore shell
04:04companies that the super-wealthy use to avoid paying vast amounts of tax, with cute names
04:09like the double Irish with the Dutch sandwich.
04:13The scheme works by transferring your company's intellectual property to an Irish subsidiary
04:18that's actually managed by people in some other place, like Bermuda.
04:22And then the IP is licensed to another Irish company that's actually in Ireland, which sends
04:28everything to another subsidiary in the Netherlands, which then sends everything to an offshore tax
04:34haven, often on a beach, where the IRS can't touch it.
04:37Easy peasy.
04:42It's all difficult to understand, and that's by design, which is why someone like Leon Black
04:48might pay someone like Jeffrey Epstein a seemingly massive fee, even by Wall Street standards.
04:55If you're going to save $2 billion, huh, maybe paying $158 million to save $2 billion is a good investment.
05:05Epstein was just one small part of a vast industry that exists for the sole purpose of
05:09helping some of the richest people in America avoid their fair share of taxes.
05:18It's all part of a larger story of how the wealthy have used their riches and power to trick us
05:23all
05:23out of the American dream, rigging the system so they always win while the rest of us lose.
05:38The wealth defense industry is the army of tax attorneys, wealth managers, accountants,
05:44people who work with the world's wealthiest families. They're paid millions to hide trillions.
05:51They are the financial butlers to the super rich.
05:58Chuck Collins doesn't just investigate this complex world of hiding wealth,
06:03it's an inherited skill.
06:05My Maloney has a first name, it's O-S-C-A-R.
06:11He happens to be the great-grandson of Oscar Mayer.
06:14A-Y-E-R.
06:15I grew up in the wealthiest 1%. My great-grandfather ran a successful meatpacking business.
06:21Four generations later, here I am. Now, I made a decision in my early 20s that I didn't really
06:27want to benefit from a system of dynastic and inherited wealth.
06:31What that did is it gave me an insight into this whole system, and particularly how the wealth
06:37defense industry, which are often what families consider the trusted advisors to the family,
06:42are part of the enablers. They're the fixers. They're the ones that wealthy families hire
06:50to move their money to the shadows.
06:53So one way to look at it is the wealthy would rather spend money on their lawyers than pay higher
06:58taxes.
06:59If they can gain the system, if they can pay for lobbyists, they're willing to pay a lot. So it's
07:05not
07:05like the rich don't want to pay. They just don't want to pay the federal government. I guess they
07:10think the rest of us should be paying taxes so they don't have to.
07:15Facing elite armies of tax attorneys and accountants, the IRS realizes in the early 2000s
07:21that they need to come up with a way to fight back.
07:24We can think of as a SEAL Team 6, an elite unit of auditors to go after the super wealthy.
07:33But the wealthy move quickly to disarm this new IRS unit tasked with getting their money.
07:38They get their friends in government to go after the IRS instead.
07:43One of the things that's happened over the last 10 years is that the capacity
07:47of the Internal Revenue Service to do oversight of the super rich has been decimated.
07:53You're four times more likely to be audited if you use the earned income credit,
07:58which is a tax provision for low and middle income households, than if you're a super rich person.
08:04When you look at who's audited, the IRS is auditing EITC claimants in the South.
08:11More than 50% of Black Americans live in the South. So why is it that we see the earned
08:16income tax
08:17credit getting so much scrutiny from the IRS, but not high-income, high-wealth individuals? Why?
08:24Because it's easier. The typical earned income tax claimant doesn't have a plethora of lawyers
08:30on retainer. They're an easy mark.
08:34But the truth about how much taxes the wealthy avoid paying is even more astounding than most people
08:40realize. I think that people had a cynical, jaded sense that the ultra-wealthy get away with it.
08:50But no one had ever seen the numbers.
08:52Tax information is among the most closely guarded secrets in America.
08:56But in 2021, the news site ProPublica revealed that it had 15 years of tax records for the wealthiest
09:03individuals in the country. I don't think anyone really understood that people like Jeff Bezos,
09:11who's the richest human being in the world, or Elon Musk, who runs Tesla and has been the second
09:17richest person in the world, could pay zero in taxes, in federal income taxes, in recent years.
09:23Elon Musk paid zero in 2018. Jeff Bezos paid zero federal income taxes in two recent years,
09:312007 and 2011. Michael Bloomberg paid zero in taxes in recent years. George Soros did it.
09:38And so that was pretty shocking in and of itself, that they could literally get their bill down to zero.
09:44Perhaps the most surprising thing is that for the most wealthy people in America,
09:49the top 0.1 percent, the tax rates don't seem to apply. And while Washington debates raising the tax
09:56rate on the wealthy, the super wealthy may as well be living in outer space.
10:04We're essentially having a debate that's an entirely a non sequitur. We are fixated on rates. Rates
10:11dominate our conversation. But we're really not talking about the essential things that matter.
10:21We're really not talking about it. We're really not talking about it.
10:22Earthlings say the only two constants in life are death and taxes.
10:25But for billionaires, there's only death. Here's how that works. If you're super wealthy,
10:32you get to decide what your income really is. You simply choose not to pay yourself,
10:37leave your wealth alone in your company or your investments.
10:41They sit on this mountain of wealth. It appreciates in value and they don't sell and they don't spend
10:50down their fortunes. Instead, they borrow against their fortunes to fund their lifestyle or help their
10:55business. While for the rest of us, borrowing means going into debt, for the uber rich,
11:01it's a way to sequester their wealth from the IRS. And then they can at the very end when they
11:09die,
11:10they can avoid the taxes at the end of life, the estate tax. And so they are really outside of
11:17the tax
11:17system. Of course, wealthy individuals aren't alone in avoiding paying taxes.
11:26In 2020, 55 of the richest corporations in America also got away with paying zero taxes.
11:35Well, we end up living in a society where we, the people, pay for all of the external costs
11:45of the corporation. So McDonald's can give us cheaper hamburgers because we're paying for the roads
11:52that its big trucks are going back and forth on to create a fast food empire. And that's the way
11:57every corporation tends to work. They, they look at whatever's going to cost them money and they
12:03figure out how to externalize that to the public sector. Where we end up in is a world with a
12:10crumbling infrastructure, with no social services, unable to pay for basic medical care for people.
12:18The government has no money of its own except what it takes directly and indirectly in levies and taxes
12:24from every pay envelope. Perhaps the strangest part of this story is that we did it to ourselves.
12:32How did we become convinced that bankrupting our government was good for us?
12:36Even as bridges and roads crumbled, the costs of college and housing exploded,
12:40wages flatlined and the middle class began to disappear.
12:48This film describes some of the ways psychologists conduct a science of behavior.
12:54For much of this film, we will study a simple response such as pecking by a pigeon.
12:59During World War II, the Pentagon hired behavioral psychologist B.F. Skinner to launch a series of
13:05experiments called Project Pigeon. The first rule for teaching anything is to structure the situation
13:11so that the behavior is likely to occur. The military wanted him to create pigeon guided missiles.
13:20So he built these boxes where he would put pigeons and there would be signs and the signs
13:25the pigeons would have to hit and then when they hit those, then eventually food would come out.
13:30You might define reading as the ability to emit an appropriate differential response to written
13:35commands. Actually, pigeons are capable of good pattern discrimination.
13:40And what he could demonstrate is very quickly this stimulus and reward system would feed the pigeons
13:46and they would learn. Even these stupid creatures could learn exactly what they needed to do to survive.
13:51Well, that's exactly the structure we've built for Congress.
13:57Shaping consists of reinforcing closer and closer approximations of the response we wish to condition.
14:03Sometimes we used a nudge or a kick under the table.
14:07Just like the pigeons in the Skinner Box experiments learned which buttons they needed to push to get the
14:12sustenance they needed to eat, so too Congress people learn which buttons they need to push to get the
14:19sustenance their campaigns need to survive.
14:21And what politicians need most to survive is money to fuel their next campaign.
14:27This Congress in the United States spends anywhere between 30 and 70 percent of its time raising campaign money.
14:37But it doesn't raise money from the average American. It raises money from a tiny, tiny fraction of the 1
14:43percent.
14:44They have become conditioned reinforcers and they can exert a great deal of control over behavior.
14:50And if that tiny fraction objects to anything Congress might want to do,
14:54it's extraordinarily hard to get Congress to do it.
14:57Our subjects are available when we need them.
15:01So, when any major issue like gun safety legislation or health care reform or the minimum wage comes up,
15:08the question is whether these funders oppose it or not. And if they oppose it, it's not going to happen.
15:14The presentation of an aversive stimulus is called punishment.
15:18It's simple. He who pays the piper calls the tune.
15:29How did we get here? To a system with a rich and powerful steer our government into serving them,
15:35instead of the people who elected it?
15:41To answer that, we have to go back to the 1970s.
15:45The Vietnam War is raging and there are protests in the streets.
15:50There's also a rising movement of consumer protection.
15:54The abuses are flagrant. Hot dogs made of substandard meat.
16:00Toothpastes that don't prevent cavities.
16:02Ralph Nader is taking on the big car companies.
16:06Testifying you this morning, Mr. Nader, I think it's a tribute,
16:08but I don't have to take the time to introduce you if you just proceed.
16:12Saying that they're making unsafe cars and they're profiting at the expense of people's safety.
16:19And there is a rising environmental movement.
16:22The public begins to demand their representatives in government fix the problems.
16:27And government responds.
16:29President Nixon creates the EPA. Congress passes the Clean Air and Water Acts.
16:34And other governmental agencies step in to begin imposing new health and safety regulations on big business.
16:41So you're beginning to get a great pushback.
16:44And the corporate captains, who have been making tons of money and feeling like they sort of rule society,
16:52are thrown back on their heels.
16:56Enter Lewis F Powell.
16:59So Lewis Powell was kind of a big deal Virginia lawyer, represented big corporations, especially big tobacco.
17:07In 1971, there's a paper written by Lewis Powell, who would later be a Supreme Court Justice.
17:15And he warns, corporate America, you better fight back, because you're going to lose your place in society.
17:21The confidential paper becomes known as the Powell Memo.
17:25Even to this day, I find that people are amazed when they hear about it, because it is like a
17:30document that would exist in a fictional account.
17:33Powell argues that corporate America is under an unprecedented attack and is losing its grip on the levers of power.
17:40The memo presents a detailed battle plan for how to secretly get it back.
17:45Everybody from Ralph Nader to Ho Chi Minh were freaking him and his circle out, like, oh my god, what's
17:50happening?
17:52He basically said, look, if we don't organize to defend business against populist regulation, America as we know it is
18:00going to disappear.
18:03Powell warns that the right needs to launch a shadow campaign to influence academia, sway the courts, and fight back
18:11against liberal voices in the media.
18:14It's like this call to arms of corporate America.
18:19For much of the 70s, the public sees elected officials as something like their lawyer,
18:24the place to go to get a local river cleaned up, or an unsafe car recalled.
18:28There is padding here, presumably might reduce the possibility of getting your teeth broken if you hit it.
18:34But for Powell's memo to work, that needs to change.
18:38And by 1980, that relationship between the public and their government will come under attack.
18:45Thank you very much.
18:49Skyrocketing inflation and slow growth produce a new phenomenon in America.
18:53They call it stagflation.
18:55Millions are struggling more than they've had to in a generation.
18:58And suddenly, a lot of Americans are receptive to the idea that big government is to blame.
19:04All of this sets the stage for a presidential candidate who will echo Powell's call to arms.
19:13And then he took another crack at the American people and said that we had inflation because you and I
19:18were living too well.
19:19You and I living too well is not the cause of inflation.
19:22We have inflation because government is living too well.
19:30But when it comes to getting people to lose faith in government, Ronald Reagan may not be the most significant
19:37candidate in 1980.
19:38I will faithfully execute the office.
19:40Almost completely unnoticed at the time is the Libertarian Party's campaign.
19:46Running as that party's vice presidential candidate is a little-known Kansas businessman named David Koch, with his brother Charles
19:53working in the background.
19:54I never grow tired of bragging about that.
19:57They're running from the right against Reagan.
19:59They consider Reagan too much of a sellout liberal.
20:01There's an enormous antagonism now in the American population towards big government, which is unresponsive, uncaring, and yes, even repressive.
20:13The Kochs don't just want to get big government out of the way of corporate America.
20:16They seem to want to get rid of all government, including ending the minimum wage and canceling social programs like
20:23Social Security and Medicare.
20:25None of it is popular.
20:27They get nowhere.
20:28David Koch spends something like $2 million of his own money on his own campaign, and they get a tiny
20:34percentage of the vote.
20:35It's a super flop.
20:38David Koch's ideals are rejected by voters.
20:40So privately, he begins crafting a plan to reshape American politics and rig the system to favor the wealthy.
20:47And so they go back to the drawing board, and they think,
20:50OK, if we want to take over American politics, we're not going to be able to do it democratically.
20:57We can't win the votes.
20:58They want to own the politicians.
21:01In order to avoid taxes, the Koch brothers have been making large philanthropic donations to charities for years.
21:07They realize at some point that they can create their own charities, and they will call them private foundations.
21:15And these will become sort of treasury chests for their own personal favorite projects.
21:21So what they're spending on is pushing their personal political beliefs, which, in the case of the Kochs, were extraordinarily
21:28right-wing.
21:31With this new strategy, the Kochs divert money from the public purse by pouring hundreds of millions into think tanks
21:37and political organizations,
21:39all geared at influencing the government to serve the interests of people with wealth.
21:44But none of these organizations are as effective at pushing their personal agenda as ALEC.
21:50It sounds kind of friendly, you know, it's like that guy you know, ALEC.
21:53But actually it stands for the American Legislative Exchange Council.
21:57And it is a really conservative organization that works at the state level to change policy.
22:03Here's how it works.
22:05Let's say a credit card company wants to change state law to make it easier for collection agencies to go
22:11after bad debts.
22:12Rather than go state to state and try to get a law passed, which is expensive and time consuming,
22:18ALEC will do the work for you.
22:20ALEC has created a pay-to-play system whereby big corporations can join the organization
22:27and become paying members on the legislative committee.
22:31A corporation will help write a bill and then ALEC will replicate that bill
22:37and transmit it to conservative members in state legislatures around the country.
22:43Some folks back home decided they wanted a law passed, so they called their local congressman and he said,
22:48You're right, there ought to be a law.
22:50Then he said,
22:50We're raised thinking that we the people drive the bus and there we are, we the people turning the steering
22:56wheel.
22:56But it turns out the steering wheel is disconnected from the wheels and the bus.
23:00It doesn't matter which way we turn it.
23:02The bus is going to go the direction the bus is going to go.
23:05And it turns out the direction the bus is going to go
23:07is the direction that the economic elite or organized special interest groups want, not the average voter.
23:15It's going to go.
23:16Owning politicians was only part of the plan.
23:18To become truly powerful, the captains of corporate America need to trick the public
23:22into abandoning the American dream.
23:28Before the 1980s, the CEOs of the biggest companies in America earned about 30 times the salary of the average
23:35worker.
23:36The CEO of the company lived in the same town with the workers of the company.
23:41His kids went to the same school as the kids of the workers in the company.
23:46It was more like a family business really where the object of the game is not to earn enough money
23:53to bequeath it to your kid as a trust fund.
23:56The idea was to have a company that's successful enough that it's still there and thriving so your kid's going
24:03to want to work at it.
24:04You wanted your workers and your customers to like you, like Macy's, so you give them fireworks,
24:11you give them a parade, you contribute to the hospital, and you do these things
24:17so that they're nice to you, so that they like your kid.
24:20They have to see you kind of as a friend of the community.
24:22But this was a time when the CEO was making 10, 20, maybe 100 times more than the janitor in
24:30the company,
24:31where now the CEO is making thousands of times more than the worker in the company.
24:36And he's not living anywhere near those workers.
24:39The object of the game, winning, means setting yourself apart from this company.
24:44They're the suckers.
24:46You're the winner.
24:47And you're relating instead.
24:48You're relating to your shareholders.
24:50You're relating to the board of directors.
24:52You're in this other world.
24:54And you see your employees and your customers kind of in the same light.
25:02It's like those are the peasants.
25:04My view is I don't even like the phrase work-life balance.
25:09Some people come into the meeting and they add energy to the meeting.
25:12Other people come into the meeting and the whole meeting just deflates.
25:16And those people just, they drain energy from the meeting.
25:20As the wealth of CEOs continues to reach new heights,
25:24the average American employee is working harder and longer for less.
25:28Because for decades, corporate America had a plan to make it that way.
25:37At GE, we bring good things to live in.
25:44We bring good things to life.
25:48At GE, we're in the business of making...
25:51In 1981, a chemical engineer named Jack Welch takes the helm of General Electric
25:56with big plans for the company that is already a household name in America.
26:03What he did was he decided one day that he makes less money selling a washing machine to someone
26:11than he does lending the money to the person to buy the washing machine.
26:15Because when he makes a washing machine, he's got to buy the metal and the glass and the workers
26:20and their insurance and all that, and he makes some profit.
26:24But when he lends money to someone to buy the washing machine, he gets pure interest.
26:29The new thing is you should try to get out of your productive industries as quickly as possible
26:34and get into financialization.
26:37And everybody went, you know, you're right.
26:40Anybody who's actually making something or providing a service, they're in the sucker's game.
26:45People that go into financial services, they're the ones who are making pure money.
26:51We bring good things to life.
26:54So he sold off all his productive assets.
26:57All the American companies started sending everything overseas.
27:00And that changed the way we think of business.
27:03Perhaps the most influential and imitated, not to mention controversial, corporate CEO of the last half century.
27:10As American industry begins a transformation in the 1980s, so too do the CEOs.
27:16As figures like Jack Welch and Lee Iacocca at Chrysler start focusing on making the most profit
27:21instead of the best products, they are greeted like corporate heroes.
27:25In more than half a century, big business titans hadn't been so celebrated and so treated as quasi-fictional characters.
27:35It was remarkable, this kind of breathless kind of movie star adoration that you'd be answering in the 1980s.
27:46Welcome to television's unchallenged authority on wealth, prestige and success.
27:52In the 1980s, Americans' new obsession with affluence fills the airways with TV shows like Dallas and Lifestyles of the
28:00Rich and Famous.
28:00Meet the stars of show business and big business.
28:04Discover how life's winners live, love, and spend their fortunes.
28:08I'm bored.
28:13And even as the standard of living begins to flatline for middle-class Americans,
28:17a new American dream is being marketed that says you can live the lifestyle of the rich and famous using
28:23two magical words.
28:25Charge it.
28:36As Americans are being seduced with the benefits of paying with plastic,
28:40in this world, you're always reaching for something better.
28:44Groups like ALEC are helping to get credit card companies deregulated,
28:47removing any legal limit on their interest rates.
28:50Because the higher you aim, the bigger the payoff should be.
28:54It should be.
28:55And it is with the Discover card.
28:57Within 25 years, the average American's debt quadruples,
29:01and the corporate elites selling the updated dream are the only ones getting richer.
29:07We can't have this discussion without mentioning the Oliver Stone movie Wall Street.
29:11Here's this extraordinary monologue by Michael Douglas, playing Gordon Gekko, giving that pitch.
29:17Greed, for lack of a better word, is good. Greed is right. Greed works.
29:26And even though Gordon Gekko was ostensibly the villain of that piece, he really wasn't.
29:31Thank you very much.
29:35I saw that movie in a theater on the Upper East Side, and there were a lot of people applauding,
29:39along with the actors in the movie applauding.
29:42Only this new and improved America is anything but.
29:45The so-called Reagan Revolution? The one that got citizens to turn on their government?
29:51It left the wealth of corporate captains soaring while the wages of workers flatlines.
29:56Minimum wage stagnates, and job security all but disappears.
30:01At General Electric, Jack Welch realizes that in this newly financialized landscape,
30:07cutting costs are the key to raising the value of the company and his personal wealth.
30:12And he transformed all of GE into a brutally honest meritocracy in which every employee is ranked
30:19from the very top down to the bottom 10%.
30:22Brutally honest meritocracy is GE speak for ruthlessly firing employees,
30:28earning Welch the nickname Neutron Jack. But he was hardly alone.
30:32Instead of innovating new products, financial innovation becomes the preoccupation of corporate
30:38America. By any means necessary, get stock value up.
30:42For all they care, companies could be producing nothing or losing money or whatever. It doesn't
30:48matter. The stock price is all we care about.
30:53The financialized landscape of America gives rise to a new way of thinking.
30:57The CEOs view the world through a lens that's fundamentally different.
31:02And that's important because they drift off into their own kind of fantasy world of like
31:07self-driving cars and everything's gonna be okay. When in fact, the society that they're creating
31:13is sinking into deeper and deeper crisis.
31:17The story we were all sold was that the free market and financialization would make us all rich,
31:22that greed is good. Instead, it turns out that the wealth of corporate America
31:27has been built on systemic poverty.
31:30If you're living on an average person's income, that hasn't risen in 50 years. It's the same as it
31:36was in the 70s, essentially. But now you have to pay thousands of percent more for the basics.
31:42Child care, education, health care, retirement. What does that do? That leaves you in debt.
31:48The average American now dies in debt. Consumers in the 70s.
31:52The old implicit bargain that really built consensus. You play by the rules and you work hard,
31:58you're gonna have a decent life. But that was really dependent on there being jobs that produced
32:05valuable products and therefore could afford to pay good wages to these workers.
32:11When the productive base was automated and then hollowed out and shipped to low-wage
32:15parts of the world, that meant that that route to a decent working-class life was foreclosed.
32:24What if four decades of corporate greed done to the American dream today?
32:30Every town's got this. It just, we're a spectacle.
32:37Fuck it, look at it. It's not normal.
32:45This is Detroit. Just half a century ago, it was the richest city in the world.
32:52The reason we're sensitive about it is because we lived in it. You know,
32:57our grandpas were working in it. It still hurts. And I'm telling you, the rest of the country, I'm
33:06telling you, we were the spiritual, mechanical, and financial center of this country. Look at us.
33:12You think you're immune to it?
33:19Many things happen in Detroit. Greed, management greed, union greed, the financial crisis,
33:26globalization, foreign competition, laziness on our part, race problems.
33:34But what really killed it was Wall Street. That's what really, really pushed it over the edge.
33:50Like a stout heart within the city is Detroit industry, which has put the world on wheels.
33:57Cars once built Detroit, and Detroit drove America's prosperity.
34:03Now the city is a shell of its former self, from a population of nearly 2 million to 650,000,
34:10and enough empty lots to fill all of Manhattan and San Francisco.
34:16Charlie Leduffe is a Pulitzer Prize-winning journalist who quit his job at the New York
34:20Times to write about his hometown, because Detroit is in many ways the story of America,
34:26a story of what financial greed leaves in its wake.
34:29Don't you go in the house? No, I go in the house.
34:32Dan Gilbert owns that building. He owns that building. He owns that building. He owns that building.
34:39He owns that building.
34:41Meet Dan Gilbert, a Detroit businessman who founded a private mortgage company in the 80s called Quicken Loans.
34:49By the 2000s, Quicken Loans had grown into the largest online lender in America. And by the time
34:55the 2007 financial meltdown came around, Detroit was ground zero for the housing collapse. Nearly three
35:02quarters of all mortgages in the city were of the risky and suspect subprime variety.
35:09Back in the day when we bundled the mortgage and they were giving them the pigs, you know what I
35:13mean? Dead people.
35:15Non-existent people, and they were bundling them into financial instruments. Dan Gilbert said,
35:20you know, from Quicken Loans said, I never sold subprime mortgages.
35:23So I know the people at the office of registrar. I got 1,600 mortgages originated by Quicken Loans. Took
35:31a
35:31random sample of the beautiful mortgages that he issued. Within 10 years, half of them went belly up,
35:38and half of the ones that went belly up were either stripped, burned, or occupied by squatters.
35:47The financial meltdown in 2007 was caused in great part by the greed of financial institutions like
35:53Quicken Loans, offering easy mortgages and the promises of a decent life, even though that life
35:59had become unaffordable. And when those loans collapsed, so did Detroit. But not the financial institutions.
36:09The Justice Department settles its case against Quicken, which never admits to wrongdoing.
36:15While their borrowers pack up and vacate their now foreclosed homes,
36:19Quicken not only survives, but then thrives by going public.
36:24A multi-billion dollar IPO, and I'm told it will be one of the largest,
36:28if not the largest IPO in the U.S. this year.
36:33The sale made Dan Gilbert the 17th richest person in America.
36:39We think if the check cleared, Jim...
36:41But Gilbert's business dealings in Detroit didn't stop with Quicken Loans.
36:45We're very, very proud to have the opportunity to own this property here.
36:50Gilbert takes advantage of the fire sale prices he helped ignite, to spend billions buying nearly
36:56a hundred properties in a city decimated by risky lending.
37:01He owns this block. He owns that building. He owns the building behind this building.
37:07He's going to own this skyscraper.
37:11Wow.
37:15Dan Gilbert had a little incentive for purchasing so much Detroit property.
37:20Where's Dan? Where's Dan Gilbert?
37:22Gilbert, who donated $750,000 to Trump's inaugural fund, seemed close to the president and his family.
37:31He's a great friend of mine. He's a supporter and a great guy.
37:34And that is perhaps why he and a handful of other billionaires were first in line to benefit from a
37:402017 Trump tax break.
37:42It was sold to the American people as a way to attract investment in poor communities.
37:48But in truth, it provided a loophole for people like Gilbert to sink billions
37:52into empty office towers in downtown Detroit, while ignoring the poorer majority black areas
37:58surrounding downtown where people grappled with one of the highest crime rates in America.
38:03Detroit still has a poverty rate several times the national average,
38:07and 20 square miles of empty lots full of abandoned buildings.
38:14Every town's got this. It just, we're a spectacle. We're a fucking spectacle.
38:22We were number one. Not New York. Not LA. Not Philly. Us.
38:28It's easy to look at. Go, look at these guys.
38:32Laugh if you want. But you are Detroit.
38:38You look at the banks and theaters and arenas of the 1940s and 50s Detroit.
38:48These are like palaces. This is a beautiful, booming place.
38:52And it wasn't just because it was growing, but because the growth, the economic activity,
38:57was based in physical reality.
39:00When you have an entirely abstracted economy, you see it's much more like New York,
39:06where now you have these crazy, bizarre luxury towers sprouting out and up out of the landscape.
39:14These towers that you can visualize them, they're extracting the value out of the city itself
39:21and removing it up into the sky. And people don't even live in these apartments.
39:27These apartments are basically like bonds. They're like stock certificates. They're these empty boxes
39:33that represent 100 million dollars, 150 million dollars, but they're not living places.
39:40They are bizarre pockets of abstracted value.
39:49They're trapped. It's like gas bubbles. You know, it's not real.
39:56For decades, we allowed the wealthy to live in an economic stratosphere,
40:00leaving the rest down on earth to pick up the tab.
40:05If I go to the average middle and working class American and say, hey buddy, you're already paying
40:1020 percent of your income in taxes, and guess what? Jeff Bezos isn't paying anything,
40:15and Mark Zuckerberg isn't paying anything, and Amazon.com paid less taxes than you did,
40:22even though it's the world's most valuable corporation. And I go to that poor guy and I say,
40:27but guess what? Despite all that, your tax rate still has to rise if you want a functioning society.
40:31He'll look at me like I'm crazy. And he's right to do so because he doesn't have the money to
40:36pay
40:36more taxes. He doesn't have the money to pay more taxes because he's already living on the edge.
40:42Living on the edge because the wealthy conspired to make it that way,
40:46to rig the system so they could win by making the rest of us poor.
40:51But as the corporate leaders were busy dismantling the American dream so their profits could reach
40:56new heights. Did they see where it was all leading?
41:01What they don't realize is if you take all the money off the table, you can't earn anymore.
41:06There's no more circulating. You've made your potential customers poor. You've made your potential
41:11employees poor and uneducated. And then you complain, ah, there's nobody buying my stuff. There's
41:16no one smart enough to work. It's because you took everything away. There's no public school.
41:20You know, then what's going to happen to your workforce? They're doing to America what they
41:28used to do to China and Africa. They used to do it to other people. And it was bad enough
41:33doing it to other people. The reason why you see some progressive awakening in America is because
41:40American citizens are realizing, oh my gosh, this thing that corporations used to do to all these
41:45people in Central America and Africa, they're doing it to us.
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