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[Assistant] Alas, the romantic sentiments of Brooks' anthem to British patriotism clashed bloodily with the facts of war as those facts were played out in the successive


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[Assistant] Three years. It was not glorious. War wasn't glorious. It was not heroic. Above all, it was not the fighting men decided worth dying for in such imaginably large numbers. But still,


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[Assistant] They died. They still, they, there's something made them go forward even though they felt it was pointless. Now their anger, this kind of


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[Assistant] Not quite universal, I suspect, but general anger and disillusionment was, was given its sharpest and paradoxically, paradoxically it's made a beautiful expression by the soldier poets that, that we're looking at.


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[Assistant] Now, with that in mind, I want to look finally at what I think is the most beautiful poem to be produced by this anything but beautiful war. Now the poet is in many ways, unlike those I've


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[Assistant] Been talking about Hitler too, although he too died in the conflict, uh, like Wilfred Owen.


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[Assistant] Isaac Rosenberg was Jewish and working class. He'd educated himself. He had no privileges, as the others had, all of whom had been born into money and an upper-class lifestyle.


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[Assistant] The Rosenbergs had recently emigrated from Russia, fleeing the Tsar's pogroms. They lived in London's East End, which was then a Jewish ghetto.


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[Assistant] Isaac left school at 14 to become an apprentice engraver. He displayed talent, precocious talent, artistic and literary talent from childhood on.


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[Assistant] He was a promising, if untutored poet and painter. He was also chronically sick. He had lung problems.


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[Assistant] He was physically tiny, five feet three inches tall. Now, these disqualifications...


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[Assistant] You know, what with the trenches insatiable appetite for new blood didn't bother the nation's recruiting sergeants. They looked at this tiny sick man coming in and said, yeah, here's your uniform.


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[Assistant] Rosenberg, as I say, could have, could have, he didn't have to fight. He, he volunteered. Even though in fact, you could say he wasn't even thoroughly English.


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[Assistant] But nonetheless, he was sent to the front in 1915. He was a private. He declined any promotion, even to a lowly, non-commissioned officer rank. He could have got it quite easily. Intelligent people were being shunted up, because without the casualty rate, the higher up the rank system you went, the more likely you were to be shot, because officers and NCOs always led from the front.


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[Assistant] It wasn't cowardice. It was a, it was a like, it was, if, if I want to put it this way, it was political principle. He did not believe in that particular class bauble.


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[Assistant] Rosenberg was killed in hand-to-hand combat in April 1918. The war is drawing to its close. Again, it's just a few months more and he would have survived and been a very great figure, I think, in the literary scene for years onwards.


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[Assistant] Anyway, this is Rosenberg's best-known poem. It's a wonderful poem, I think. It's called Break of Day in the Trenches. Now, it's what's traditionally called an Obard, a dawn poem. We've met that kind of poem before in literature. Hailing, you know, think for instance of Dun's The Sun Rising. Hailing the new day is traditionally a joyous thing.


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[Assistant] Uhm, think also of, of, of Juliet's speech to the dawn on, on the first morning of her marriage in Shakespeare's play. When the dawn rises, the, the world is renewed. And with it, all sorts of, as it were, optimisms are reborn.


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[Assistant] Traditionally, well not traditionally, by military regulation, soldiers stand too because dawn is the moment of day most favored for attacks. Why?


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[Assistant] Because people are sleepy, because in fact quite often there's a change of guard, because in fact it's a very good time to come in and make your strike if you're the attacking force. Anyway, this is Rosenberg's Bitter Obard, his bitter dawn poem, Dawn Breaking in the Strait, in the trenches.


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[Assistant] The darkness crumbles away. You know that word, crumbles. The darkness crumbles away. It is the same old druid time as ever.


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[Assistant] Only a live thing leaps my hand. A queer sardonic rat. Rats of course fed on corpses.


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[Assistant] As I pull the parapet's poppy to stick behind my ear.


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[Assistant] Droll rat. They would shoot you if they knew your cosmopolitan sympathies.


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[Assistant] Now you have touched this English hand. You will do the same to a German soon, no doubt, if it be your pleasure to cross the sleeping green between.


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[Assistant] Talking about a very ironic connection between the two trenches. The rat moves between them. Quite freely, the soldiers can't move between them because it's a killing ground.


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[Assistant] Now, it's all there. Anger, bitterness, irony. But above all, I would suggest accuracy.


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[Assistant] Rosenberg has the artist's eye for detail and composition. He looks up and looks at the dawn and then he feels the rat.


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[Assistant] It is of course heartbreaking that life should have to pay so much in terms of death and suffering to produce great writing, but at the end of the day,


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[Assistant] And, and now that the war is almost a century away, that day I think is at last dawning, poetry is arguably one of the very few good things that came out of that most awful of conflicts.


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[Assistant] Now, by way of postscript, I'd like to say a few words about the aftermath.


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[Assistant] English literature bore a lasting wound from 1914-1918, the hostilities.


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[Assistant] Not all the poets died. Sassoon for example lived on.


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[Assistant] Although he was what Graham Greene would have called a burnt-out case. He wrote no more memorable poetry in my judgement after 1918.


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[Assistant] Robert Graves, who was a friend and comrade of Sassoon's, although he had little time for Wilfred Owen, whom he rather despised, survived the war. Graves survived the war. Graves wrote relatively little actual war poetry, although he did pen the best memoir, prose memoir of that conflict, Goodbye to All That.


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[Assistant] Nonetheless, the experience of that war is indelibly there engraved as poetry, which I personally reckon to be among the best written in the 20th century.


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[Assistant] Take, for example, Graves' serial comic lyric, the Persian version. It's a funny poem, but it's about war. He wrote it well after the war, but it seems to me you can still feel like bruises come to the surface.


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[Assistant] You can still feel it, you can feel the war there in this poem. This is Graves' poem. It's very funny. I'll try and do justice to that as I read it out.


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[Assistant] Truth-loving Persians do not dwell upon the trivial skirmish fought near Marathon.


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[Assistant] As for the Greek theatrical tradition, which represents that summer's expedition,


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[Assistant] Not as a mere reconnaissance in force by three brigades afoot and one of horse, their left flank covered by some obsolete light craft attached from the main Persian fleet, but as a grandiose ill-starred attempt to conquer Greece, they treat it with contempt.


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[Assistant] They, you know, there's enemies at home, the home front, the establishment, you know, the generals always tell you lies. It's in their nature.


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[Assistant] What the poem asserts is, forget the politicians, the historians, the newspapers, the lecturers in universities. Only soldiers know the truth because they were there. And only poets will tell you the soldier's truth. But, at the end of the day, who listens to poets?


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[Assistant] Hahaha, good old Beaver. He never stops building.


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[Assistant] But I'm glad to have my home too.


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[Assistant] I've done this dark curry before and it tastes amazing. So, I would like the judges to also taste it and, uh, feel the same thing.


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[Assistant] I've spent an hour and a half prepping the duck. I need to start the curry sauce now.


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[Assistant] I need to make sure the sweetness from the lychee is in a good balance in the curry sauce.


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[Assistant] I need to shear the duck, render the fats, get a golden crispy skin then put it in the oven for 8 minutes. It's gonna be very close.


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[Assistant] Just minutes before service, all my elements are ready. My duck is out of the oven. My curry sauce is ready. I'm ready for service.


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[Assistant] I've got my cheesecake still in the freezer. I've been dreading this moment. I have to check if these cheesecakes are set.


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[Assistant] The cheesecake looks that, it looks like good consistency, so I'm happy with that.


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[Assistant] Oh, thank goodness I finally got through! Are you alright?


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[Assistant] Our planet's diverse, thriving ecosystems may seem like permanent fixtures, but they're actually vulnerable to collapse. Jungles can become deserts.


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[Assistant] And reefs can become lifeless rocks, even without cataclysmic events like volcanoes and asteroids.


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[Assistant] What makes one ecosystem strong and another weak in the face of change?


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[Assistant] The answer, to a large extent, is biodiversity.


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[Assistant] Biodiversity is built out of three intertwined features, ecosystem diversity, species diversity, and genetic diversity.


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[Assistant] The more intertwining there is between these features, the denser and more resilient the weave becomes.


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[Assistant] Take the Amazon rainforest, one of the most biodiverse regions on Earth, due to its complex ecosystems, huge mix of species, and the genetic variety within those species. Here are tangled liana vines, which crawl up from the forest floor to the canopy.


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[Assistant] Intertwining with treetops and growing thick wooded stems that support these towering trees.


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[Assistant] Helped along by the vines, trees provide the seeds, fruits, and leaves to herbivores such as the tapir and the agouti.


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[Assistant] ...which disperse their seeds throughout the forest so they can grow.


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[Assistant] Leftovers are consumed by the millions of insects that decompose and recycle nutrients to create rich soil


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[Assistant] The rainforest is a huge system filled with many smaller systems like this, each packed with interconnected species.


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[Assistant] Every link provides stability to the next, strengthening biodiversity's weave.


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[Assistant] That weave is further reinforced by the genetic diversity within individual species which allows them to cope with changes.


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[Assistant] Species that lack genetic diversity due to isolation or low population numbers are much more vulnerable to fluctuations caused by climate change, disease, or habitat fragmentation.


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[Assistant] Whenever a species disappears because of its weakened gene pool, a knot is untied and parts of the net disintegrate.


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[Assistant] So, what if we were to remove one species from the rainforest? Would the system fall apart?


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[Assistant] Probably not. The volume of species, their genetic diversity, and the complexity of the ecosystems form such rich biodiversity in this forest that one species gap in the weave won't cause it to unravel.


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[Assistant] The Force can stay resilient and recover from change.


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[Assistant] But that's not true in every case. In some environments, taking away just one important component can undermine the entire system. Take coral reefs for instance.


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[Assistant] Many organisms in a reef are dependent on the coral.


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[Assistant] It provides key microhabitats, shelter, and breeding grounds for thousands of species of fish, crustaceans, and mollusks.


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[Assistant] Corals also form interdependent relationships with fungi and bacteria.


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[Assistant] The coral itself is a loom that allows the tangled net of biodiversity to be woven.


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[Assistant] That makes coral a keystone organism, one that many others depend on for their survival.


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[Assistant] So what happens when destructive fishing practices, pollution and ocean acidification weaken coral or even kill it altogether? Exactly what you might think.


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[Assistant] The loss of this keystone species leaves its dependence at a loss too, threatening the entire fabric of the reef, ecosystem, species, and genetic diversity.


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[Assistant] Together form the complex tangled weave of biodiversity that is vital for the survival of organisms on Earth. We humans are woven into this biodiversity too.


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[Assistant] When just a few strands are lost, our own well-being is threatened. Cut too many links and we risk unraveling it all. What the future brings is unpredictable.


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[Assistant] But biodiversity can give us an insurance policy, Earth's own safety net, to safeguard our survival.


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[Assistant] Talk to you about a lot of things. This is today's outline. Every week I will


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[Assistant] Begin with an outline of what we're going to talk about. I'll also summarize the things that I think are absolutely critical for you to have learned the previous week from lecture and from sections. Today's outline, introduction, and then we're going to talk about something that I call the paradox. This course, in terms of my philosophy of teaching, is not about answering questions. It's about raising questions.


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[Assistant] And getting you to think much harder and more deeply than you have thought, presumably, about many of the issues that you may, maybe take for granted. Uh, so the first thing we're gonna do is start with a paradox. We're gonna talk about inequality by race.


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[Assistant] It is impossible to talk about income and wealth inequality in the United States.


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[Assistant] And many other places around the world without talking about structural racism.


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[Assistant] They can be theoretically looked at separately, but they are integrated and intertwined in so many fundamental ways. And we will examine that literally every week. Uh, and then economic mobility. And let me just say something about that before we get into it. We are not only going to be examining


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[Assistant] The distribution of income and wealth, but we're also going to examining a first cousin, which is how easy it is for somebody who is born


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[Assistant] Relatively poor or very poor or lower middle class or working class, whatever you want to define it, to move up. That's another very critical part of the story and the questions that we will be addressing.


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[Assistant] And finally, today, we're going to be looking at a kind of a pretty basic question. Should you care about widening inequality of income and wealth?


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[Assistant] Is it something that we should be spending a lot of time on, but exactly why, if it is something you should care about? So we'll get into all of this, but first of all, in terms of introductions, uh, there is a kind of social contract. This is something I'm going to be talking about again and again in the course, because


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[Assistant] Some of you are political science majors, and some of you are economics majors, and some of you are sociologist majors, and some of you are history majors. Uh, but this course is interdisciplinary in the sense that in my view, my humble view, after having been engaged with this subject,


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[Assistant] Academically and research wise and also in terms of administering and running programs, my view is that you can't separate economics, politics, sociology and history.


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[Assistant] They're academically separate silos, but for this course we are going to be integrating them entirely. And the social contract is a very fundamental part of what we will talk about explicitly or implicitly. And by social contract I mean what we owe each other.


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[Assistant] As members of the same community in this classroom or community as in Berkeley.


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[Assistant] University of California or community as in Berkeley town or community as in East Bay or community as in people who inhabit the United States.


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[Assistant] Or as human beings. What do we owe each other?


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[Assistant] We're very comfortable talking about rights. We have a bill of rights in the constitution. What about a bill of responsibilities? We all together.


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[Assistant] Are a learning community. I don't believe


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[Assistant] That a chorus is a kind of place where a professor or a lecturer kind of gives you information. That's just a waste of time. You can get information from a book, a text. No. The sections in this classroom are places where you are hopefully inspired


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[Assistant] One of the best ways of learning I have found in my life is to discuss something with somebody who disagrees with you. Now we have a little bit of a problem here at Berkeley in that the consensus is very strong.


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[Assistant] It's hard to find a lot of people who disagree with the dominant view that I would assume many of you have.


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[Assistant] But that means that in sections, and to the extent that we in this course have a chance to actually discuss things, we have to prize respect and protect.


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[Assistant] People who have what might be considered the dissenting view. They are incredibly valuable to us.


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[Assistant] And if you do have a, quote, minority or descending view, not only


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[Assistant] Should you be respected, but also, obviously, that discussion is the essence of learning for everybody. So you are a gift to us.


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[Assistant] Uh, introductions, uh, who I am. Who am I? Well, I, uh,


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[Assistant] I've been teaching here at Berkeley for maybe 17 or 18 years. I never expected it was going to be that long. Before that,


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[Assistant] Uh, I was teaching at a university called Brandeis before that.


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[Assistant] At a university, uh, called Harvard


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[Assistant] Uh, and along the way, I also was in the Bill Clinton administration. I was an economic advisor to Barack Obama. Before that, I was secretary of labor in the Clinton administration. Before that,


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[Assistant] In terms of public work, I was director of the policy planning staff.


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[Assistant] I was assistant to the Solicitor General in the Ford administration. Am I getting into ancient history for you? Yea. And before that I was special assistant to Abraham Lincoln, as many of you, you know that.


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[Assistant] But I've been, so what I'm trying to tell you is that I'm bringing to this course some experience.


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[Assistant] What else can I tell you? I've written a lot of books. My books are the kind of books that once you put them down you can't pick them up. No, that's, that's a bad, a bad joke.


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[Assistant] That's all you need to know about me. In terms of you...


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[Assistant] Uh, I've talked about what this course is about. Oh, one more point about the course. We are looking at the United States.


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[Assistant] Because that's where we get a lot of data. No other country has as much data, detailed data about wealth, income, inequality and so on as the United States.


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[Assistant] But if you are an international student or if you're interested in inequality or widening inequality of income and wealth and other things in other countries, hopefully what we begin to uncover here


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[Assistant] In this course about the United States will be useful to you because many of the trends


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[Assistant] That is, the United States seems to be the leader, quote unquote, in many of these


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[Assistant] Uh, who you are, here's where the clicker exercises come in. So get ready, hopefully.


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[Assistant] So this is the first question. This is the first clicker exercise starting with something very easy about you. Uh, when somebody asks you, where are you from? You're most likely to say A.


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[Assistant] California, be somewhere else in the United States or see another nation. Now, what I


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[Assistant] Do in the clicker exercise, these poles, I'll put something like this up and then I'll say to you, go. And what go means is considerate.


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[Assistant] Doesn't have to be a perfect answer, nobody's gonna know, this is anonymous. I mean, nobody outside


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[Assistant] The CIA has any idea what you are just clicking. That was a joke. Bad, another bad joke. Nobody knows. It's completely anonymous. And then I will say after a few seconds,


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[Assistant] I'll say, alright, end the bidding. Now it's been 22 seconds, let's end the bidding there, uh, and let's see what the results are. So you can see 71% of you, 376, are from California. Uh, this is a public university, I'm not surprised, it's the best public university in the world. It's true, it is true.


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[Assistant] Uh, and then, uh, but we've got a number of you from somewhere else in the United States and then about 70 of you. That is 13% from another nation. Uh, so there is a little bit of diversity. One out of eight people in the United States lives in California.


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[Assistant] More about you, okay. Uh, my major or major area of interest falls into the following category. A, economics. B, politics, political science or other social science. Or C, humanities. Or D, sciences or mathematics. Or E, the arts. Go.


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[Assistant] And let's end the bidding there and see


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[Assistant] Well, it's kind of a cross-section. We've got, uh, we've got a 16% economics, and then we've got a lot, about a third of you politics or other social science, 10% of you in the humanities, almost 40% of you sciences or math, and the arts. Only 13 of you are in the arts? Well, good for you.


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[Assistant] Okay, more about you. Okay, when I was growing up and this is actually more


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[Assistant] Self-revelation that is relevant to the course, certainly. When I was growing up, I would say my family was A. Wealthy. Purely subjective. Right? B. Upper middle class or professional. C. Middle class. D. Working class.


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[Assistant] E, low income or poor. Again, subjective go. And let's end the bidding there and see,


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[Assistant] Working class, low income or poor, I want to just stress the subjectivity here. When I was growing up, uh, in a rural area of New York State, I discovered


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[Assistant] When I was in my twenties, not until I was in my twenties, that we actually were quite poor. But I didn't know it because everybody around me was...


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[Assistant] Poor. That is, you don't know much about where you are situated economically if everybody around you


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[Assistant] Relativity. Keep that word in your head because we're going to be talking about relativity later on.


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[Assistant] Uh, this is interesting. This is the self-reported incoming undergraduates at UC Berkeley. Just the most recent data we could find. And one thing that sort of struck me as interesting is that as you get lower income, working class lower income, more and more transfer students.


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[Assistant] Now that's not surprising when you think about it because a lot of people who are lower income or poor, they start at community colleges.


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[Assistant] That is actually an extraordinary vehicle of upward mobility for a lot of poor or lower income young people.


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[Assistant] Not ideal, obviously, a lot of things wrong with it, but there is a vehicle that should be evident from this graph. Now we get to the paradox.


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[Assistant] And maybe the best way of explaining this paradox is to take a look at what has happened to economic growth in the United States in the post-war era. Now we're starting here.


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[Assistant] Uh, before 1950, around 1946, a lot of what we do in this class starts around the end of the Second World War. Because that is...


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[Assistant] Just arbitrary definition, the modern era where a lot of economic decisions and political decisions have been made about the structure of the economy. 1946 is a key year. It's a key year because I was born in 1946. It's a key year because George Bush and Bill Clinton and Donald Trump


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[Assistant] We're all born in 1946. All of us within about five months of each other. We waved at each other as infants.


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[Assistant] You heard her at the beginning of the course. She is a part of this course. She lives inside me. I want to meet her. I want to meet her. I mean she is my height.


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[Assistant] If any of you knows Dolly Parton or somebody who knows Dolly Parton, please get to work. There's not a lot of time. Uh, and you know who else was born in 1946? Cher.


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[Assistant] I mean, anybody who was anybody was born in 1946.


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[Assistant] And so we start with, uh, 1946, and the question, uh, in fact I'm gonna review it to you right now, is what happened to the US economy beginning after the Second World War, and this is adjusted for inflation. Wow! That's called economic growth.


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[Assistant] And you see at the end, I mean this is the recession, pretty bad recession, the pandemic recession, but right now we're sort of right there.


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[Assistant] And later on in the course we'll talk about what the Fed is doing, uh, that may push us back down here, but this record, again, adjusted for inflation, by that I mean we're talking about real purchasing power, is an extraordinary record.


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[Assistant] Well, great. And then the question is, well, who has got all of that economic gain?


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[Assistant] Productivity and the typical worker's wage compensation. Uh, now here, again, let me pause to explain something. Very often in the course, I'll put on the bare bones of a graph and some of you may be


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[Assistant] Graphophobes. You may see a graph and just freeze. So,


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[Assistant] What I want to do pedagogically is explain it before I show you what the graph is and why it's important. Now this graph that I'm about to show you will show you over time


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[Assistant] What has happened to the median wage. Median. That is half above, half below the wage of the typical worker in the United States.


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[Assistant] Over time. And I'm also going to compare that in this graph to productivity. How productive the typical worker has been. And what you will see is that productivity of the typical worker and wages of the typical worker rose together in tandem. Which is not surprising.


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[Assistant] That's what we thought was the rule. In fact, when I was


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[Assistant] In the Federal Trade Commission in the 1970s and we were starting with a bunch of economists. We looked at the wage data and labor data and we saw that yes, wages went up and productivity went up and they went up together. But then I noticed something and I remember saying to


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[Assistant] The, the other economists I was working with, uh, but there's something going on here. They're starting to depart. They're starting to separate. Productivity is continuing to go up and wages are starting to stagnate a little bit. And the other economists that I shared that


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[Assistant] And again we're going to look at Predictive Growth and Hourly Compensation. Beginning.


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[Assistant] In and, and we're going to set it.


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[Assistant] At cumulative change, and this is since 1948. So we're looking at how changes in the median wage starting in 1948, could have been 1946,


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[Assistant] Continue to go up together, and then I was starting to see something around here.


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[Assistant] 1979, 1980, and this was what I was starting to see. Productivity was continuing to rise faster than the median wage. What was that all about? How did that happen? Why did that happen? Why that gap?


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[Assistant] It was a paradox in 1978, 79, 80 when I noticed it and began talking about it and other people began talking about it and it became more and more of an oddity.


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[Assistant] We'll talk more about it. But the question for you is,


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[Assistant] Well, I want to show you this. This is the, this is current dollars. This is why, if you don't adjust for inflation, none of this makes sense. Just look at the constant. This is in 2018 dollars.


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[Assistant] In terms of real purchasing power, uh, in 1964, the real purchasing power of average hourly wages in the United States, uh, was $20.27 and then you get


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[Assistant] To 2018, the latest data that we have confidence in, and it's $22.65. So over this entire period of time, uh, you know, a very long period of time when the United States economy is growing dramatically, the typical worker average hourly wage is not any better off in terms of real purchasing power. This has huge


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[Assistant] So where did most of the economy's gains?


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[Assistant] Go! This is another clicker question, but this is more complicated.


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[Assistant] Then the other clicker questions I've given you. A, into business investment. Most?


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[Assistant] Or D, into environmental protection, public health, infrastructure, education, military expenditures, basic research,


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[Assistant] Where did you think, where do you think most of the economy's gained since the median wage stayed flat and the economy kept growing?


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[Assistant] Well, they must have gained, they must have gone somewhere. Where did they go? Go.


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[Assistant] Uh, a few of you, 8% think they went into business investment. Uh, well some of it did. Certainly. And uh, into government programs for the poor.


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[Assistant] And then, uh, into environmental protection and not very many. Well, let's take a look. As we get into the course, the reason these clicker polls become useful is they


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[Assistant] Help you to think and ask yourself questions, and then they also guide me in terms of helping give you, not exactly the answers, but data.


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[Assistant] And the data is, since 1980s, here's what's happened. And again, we're using 1980 as the beginning. We're looking at the relative to 1980. What happened to wages? Well, we can see that wages of the bottom 90%, the bottom 90%,


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[Assistant] Uh, wages relative to what they were in 1980. Well, they rose a little bit.


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[Assistant] Now I'm not talking about median. Median is half above half below. I'm talking about the bottom 90%.


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[Assistant] Uh, and then we say that the top one percent, uh, did much, much better. Look at that. Their earnings, their change in earnings relative to 1980, quite dramatic. And then the top one tenth of one percent,


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[Assistant] Well that's a fairly powerful reality.


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[Assistant] Maybe you like it, maybe you don't like it, maybe it's inevitable, maybe it's not a problem, but at least we are seeing the same data.


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[Assistant] Income growth has changed a lot in the last 30 years.


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[Assistant] How much growth do you get? If you're at the top of the income ladder, how much growth do you get? But we're going to do something kind of complicated to this graph. And this is going to tell, I'm just warning you, this graph is going to take you, even you graphophiles, even people like me who loves, love the visual demonstration of information,


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[Assistant] You might choke a little bit on this graph. Are you ready? I just want to prepare you. Okay.


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[Assistant] But for those of you who are not quite with us, what we're doing is we're comparing 1980, and we see in 1980, most of the growth in income was in lower income people. By 2014, look, by 2014, look where the growth is.


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[Assistant] And let's just be very specific. The poor and middle class used to see the largest income growth.


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[Assistant] But now, and maybe Nikki, we can move that poll over so people can read that, uh, but now with a very affluent...


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[Assistant] The 99.999% percentile see the largest income growth. In other words, what we've seen is a dramatic shift.


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[Assistant] Again, is it a problem? Is it not a problem? Well, let's hold that off, but let's at least see how dramatic the change has been.


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[Assistant] Uh, and when I talk about the suspension bridge, what I'm really talking about is a longer time series. If you go back


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[Assistant] All the way back to the 1914, 1915, we're not going to do this very often, but I want to take the largest view and what I want to show you is something that is quite


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[Assistant] Amazing. To me, it's quite amazing, because what we see when we take the long view is that in the between 1912 and 1930 beginning of the Great Depression,


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[Assistant] The top half of 1% had a lot of the total income in the 20s and early 1930s, but then as the Great Depression wore on, as we went into World War II, as we went into, well, after I was born, and Bill Clinton, and Dolly Parton, uh, something happened. Uh, and we had the greatest degree of equality.


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[Assistant] We've had, the top 1% had the smallest percentage of total income. This is before taxes. And then around 1980, we started to go back to where we were. And that's why I talk about it as a suspension bridge. Because we seem to be repeating some sort of historic cycle or reality.


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[Assistant] And one of the paradoxes we've got to unravel in this course, it's not economics, it's not


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[Assistant] Political science or politics is not exactly sociology, is what happened in the middle. Why this period of time?


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[Assistant] Roughly from the end of the second world war through the


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[Assistant] 1980 or a little bit after 1980, why did we see the economy acting, functioning so differently than it had before or since?


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[Assistant] What was exceptional then? Now I should tell you another thing about the course here. The first six weeks we're going to be examining why. What happened?


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[Assistant] We're gonna look at the y from a lot of different angles and dimensions.


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[Assistant] We're going to be looking not so much at the why, we're going to be looking at, well, what do we do about it? Or if we're concerned about it, what are the policy areas and the policy implications? But we can't get to the policy part of the course until we answer the why part of the course. Because policy talk, without understanding what actually happened,


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[Assistant] Is an exercise in futility. Some of you


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[Assistant] In fact, next week we're going to be talking about capital markets. Some of you may have a tendency to want to vilify certain people.


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[Assistant] I don't know, whoever, whoever you want to vilify, people who are very rich, powerful, I'm going to try to discourage that.


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[Assistant] Because making this about certain bad people.


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[Assistant] And also makes it impossible to have an intelligent policy discussion. Because this is not about anybody behaving badly.


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[Assistant] Or to put it slightly differently, uh, throughout this entire period of time, there are people that behave badly. You always have people that behave badly. But what do we mean behave badly? And everybody is working within a system. The question is, what changed about the system?


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[Assistant] Now this is important. This is one, we once grew together. This is between 1947 and 1979, but this shows you that the lowest fifth, the poorest fifth of Americans, they grew during this period in terms of income, not height, in terms of income, grew more than even the top fifth.


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[Assistant] This was a period of time when we all, all inhabitants of the United States, grew together by income. Now I don't want to glorify this period of time, I mean women were still second class citizens, black people,


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[Assistant] Latinos were still second class or third class citizens.


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[Assistant] This was not a glorified wonderful time, but in terms of the narrow issue we are examining,


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[Assistant] Particularly with regard to income, there is an extraordinary sort of growing together phenomenon.


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[Assistant] Now contrast this with the period right after this. This is just before the Great Recession. And I, I, I bracket this before the Great Recession because the Great Recession, we will see, changed a lot of the structure of the economy. But look at what happened between 79 and 2010 in terms of the lowest fifth got poorer.


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[Assistant] The top fifth started to move away from everybody else.


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[Assistant] Now we're not talking about the top one tenth of one percent, we're talking about the top fifth, the top twenty percent. Something, what, something happened in this period of time.


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[Assistant] Uh, we have not yet talked about wealth. We've talked about income. Now I want to say something about wealth. Wealth is different from income in some very, very important ways. Income is measured as a flow of earnings over a certain period of time.


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[Assistant] Usually a year. This is my yearly income. This is what I report if I'm reporting my income to the


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[Assistant] Is the result of that flow. Wealth is, wealth concerns my assets. Where I put my income. I may put my wealth into the stock market.


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[Assistant] Or I may put my savings and wealth and savings, what we're talking about, if I have any at all, I might put it into a house. Or I might put my wealth into a, someplace else to keep it.


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[Assistant] Stock market. Wherever you put your wealth, if you have any savings, your savings are basically what we're talking about.


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[Assistant] Total assets at a particular time. But here's the thing.


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[Assistant] Income also flows from wealth. What do I mean by that?


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[Assistant] If you have a bunch of stocks, you have a lot of value in the stock market, you might get dividends from the companies you own.


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[Assistant] Where the little pieces you own of companies, dividends are the companies basically giving you a little, little piece of your ownership stake back per year.


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[Assistant] Not all shares of stock have dividends attached to them, but a dividend would be an example of making some money off of your will. Or you might own an apartment building.


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[Assistant] And you get rent from that apartment building. The apartment building is your wealth.


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[Assistant] And the income from your renters is income from that will.


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[Assistant] Talking about all of this is people get very confused and policy makers even get very confused about all of this.


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[Assistant] Tulsa, Tesla, or shares of stock of


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[Assistant] Amazon or whatever shares of stock they have. No, what they do is they borrow money from the bank, usually a big bank.


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[Assistant] And use their shares of stock, their huge tens, hundreds of billions of dollars as collateral to get pretty good terms on a bank loan. And they live off of those loans. I'm looking at your faces and I would say 20% of you have no idea what I just said. But we'll come back to that. Don't worry about it.


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[Assistant] Uhm, income from wealth, uh, this is also important. The top 1%. Here is the top 1%.


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[Assistant] Uh, more and more of the top 1%. This is a time series again starting in the late 70s, 1980, going all the way up as close as we can get to the present time in terms of good data. You can see that


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[Assistant] The top 1% is getting more and more and more of their income from their wealth. Again, my scanning of your faces. If you understand what I'm talking about, great. If you don't, don't worry about it. We will come back to this. This will become very, very clear to you. The readings make these things very clear. Total family wealth.


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[Assistant] This should be very clear to you. Here's the top 10%.


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[Assistant] In terms of wealth, this starts in 1989. Going through 2020, this is the top 10% in terms of total wealth. This is the


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[Assistant] This goes up to almost the 90th percentile. This is the bottom 90% of Americans in terms of the total wealth that they have accumulated. That's the thing about wealth.


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[Assistant] It's very hard to accumulate it. If you're not earning very much, you may never accumulate well. Most people, and again we're talking about in the United States, accumulate almost no wealth.


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[Assistant] The wealth they have is probably in their homes and the value of their houses. If they don't have a house, if they're renting,


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[Assistant] Then maybe their wealth is in a savings account.


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[Assistant] But most people, relative to the top 10%, relative to the top 1%, have almost no wealth.


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[Assistant] This again is important for you to understand in terms of the structure of the economy and how the structure of the economy has changed. And it's important for you to understand in terms of what has happened to politics.


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[Assistant] Everything we are talking about has a correlate.


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[Assistant] In the sociology and the politics of this country. And I might add, those of you who are international students, if you are in France, if you are in Britain, if you are from Scandinavia, you see a similar pattern. Emerging. Emerging. Not quite this extreme. The wealth held by the richest 400 Americans.


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[Assistant] The richest 400 Americans has a percentage of the total US economy. Let's take a look.


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[Assistant] Starting in 1980, this is just 400.


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[Assistant] This is not blaming them. Let me hasten to say this is not about them being bad or wrong or doing something that is nefarious. This is simply about what has happened.


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[Assistant] The 18 richest American families wealth adds a share of total U.S. wealth. Let's look at just the 18. Just the 18.


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[Assistant] And look at what all of this has meant in terms of racial categories. Now you know


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[Assistant] You've taken courses, you understand, you are sophisticated enough to know that race is a social construct.


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[Assistant] But it's a social construct that has consequences, social consequences, in terms of racism.


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[Assistant] And not just racism today, but a history that becomes more and more important to explaining where people are today.


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[Assistant] Which of the following is true? Now sometimes I'm going to give you these kinds of questions and they are intended, and you've got to understand they are intended


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[Assistant] To just be a little bit of a brain teaser. I mean, I just want you to suffer a little bit.


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[Assistant] Not suffer, I just want you to go, hm, hm. Just a little bit of a, of a, not very hard, but just a little bit.


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[Assistant] So this one, and I do this, which of the following is true? Only one of the following is true. Now which is it? I will go through each of them.


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[Assistant] A, the real, the racial wage gap. Wages between...


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[Assistant] The racial wage gap is larger than the racial wealth gap. That's A.


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[Assistant] B. The typical white family's financial assets are three times that of the typical black or Latinx or Latino family.


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[Assistant] Relative to 1979, the income of the typical black female has increased, while the income of the typical white male has declined. One of these is true. Which is it? Go.


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[Assistant] Okay, let's end the bidding there, and then let's, instead of my telling it to you, let's just look at the data.


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[Assistant] Oh, we probably have to look at what you say. Most of you say,


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[Assistant] B is the one that's false. A typical white family is financial, three times that of a typical black family.


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[Assistant] Uh, and uh, relatively few of you say A.


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[Assistant] Okay, so most of you are bunched around the typical white family's vernacular assets are three times that of a typical black or latinx family. Uh, well let's just see.


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[Assistant] Uh, these are changes in wages by race, starting in 1979. Again, 7980 is the critical beginning of something. Something happened.


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[Assistant] Uh, and uh, let's just take a look at this. Well, what's interesting here is this is relative to 1979. Relative to 79, interestingly, we see that black women


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[Assistant] Have done, relative to where they were in 1979, they've done pretty well.


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[Assistant] And white men, relatively worthy in 1979, really have, are worse off.


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[Assistant] The racial wealth gap is substantially greater than the racial income gap. Let's take a look.


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[Assistant] Because wealth again is a cumulative effect.


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[Assistant] And you can see that the racial wealth gap


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[Assistant] Here are white people in terms of the wealth that they have.


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[Assistant] Since 1963, adjusted for inflation, incredibly increase, very substantial increase in wealth, but here we have black and Hispanic or Latino families not really keeping up at all. So there's a big difference here.


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[Assistant] The racial wealth gap is much greater than the racial income gap.


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[Assistant] Of financial assets in the United States by race? Is it three times white people?


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[Assistant] So, that's the data we have.


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[Assistant] The answer was it had to do with, paradoxically,


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[Assistant] Black women doing much better since 70, relative to 79, than white men, relative to 1979.


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[Assistant] Now all of this is intended just to get your mind


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[Assistant] Making you curious. How is it, what's happened? What, a lot of very dramatic things have happened over the last few decades. Well, what were they?


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[Assistant] Now we've got to be careful with measurements, and in your readings, I just want to put a little bit of a warning sign, uh, average and median.


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[Assistant] The people at the top and the people at the bottom and the average can be brought up just because you have a lot of wealth or a lot of something at the top.


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[Assistant] The basketball player Shaquille O'Neal and I have an average height of six foot two. What does that tell you? It tells you almost nothing.


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[Assistant] Individual household or family, some of these measurements, and most of the measurements, most of the data we have, ultimately come from both the Labor Department and the Commerce Department of the United States.


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[Assistant] Some state data as well, uh, they, some of them are families, some of them are individual, some of them are household income or wealth. Just beware. It could be that


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[Assistant] It's confusing if you're comparing apples and oranges.


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[Assistant] Now in everything you've seen so far, I have controlled for all of these, but when you read all of your readings or all of the additional readings, and by the way, each week,


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[Assistant] We've come up with readings that we, GSIs and I, think are really quite essential, but then there are additional readings, for those of you who want to get into the details.


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[Assistant] And I hope you have the time and inclination to do some of the additional readings. But my point is, some of this, you just have to be, ask yourself, well, are they talking about before, after taxes and transfers? Also, beware of the measures of inflation.


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[Assistant] Because I've said now in this class several times, when we look at time series, I've said adjusted for inflation. Well, yes, you have to adjust for inflation if you want to actually talk about the real purchasing power of the dollar, of a wage, or whatever it is, but there are different measures of inflation.


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[Assistant] It depends on what the market baskets of goods is that you are measuring and comparing.


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[Assistant] Also beware of the difference between income inequality, spending inequality, and wealth inequality. Some of the readings


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[Assistant] I mean in fact there's a whole bunch of people out there who say we should not worry about income inequality as long as there is rough spending equality.


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[Assistant] Also, samples, racial statistics, I mean a lot of the US government data on race for example, bunches


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[Assistant] All Asians together. Can you imagine anything more absurd?


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[Assistant] You're taking a big chunk of the entire world that happens to be in the United States and you're saying they're all the same and we're gonna treat them all the same?


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[Assistant] Well, a lot of these categories are left over from years before when it didn't seem quite as absurd to categorize, but we've got to be aware of how foolish some of these categories might be or become.


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[Assistant] Okay, mobility. As I said to you earlier, another dimension of all of this, besides income inequality and wealth inequality, we gotta look at how easy it is for somebody to move up or fall down.


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[Assistant] I mean, if there's a lot of mobility, if you, uh, born into a poor family can very easily become wealthy through just working and playing by the rules, then


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[Assistant] It's less of a problem than if you're born poor and you can never get anywhere.


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[Assistant] So let's take a look at mobility. Uh, this is a question for you. It's a yes-no question. We can do it quite quickly.


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[Assistant] Are you satisfied with opportunities to get ahead in America by working hard? A. Yes. B. No. Go.


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[Assistant] Okay, let's end the bidding there and see what you think. Overwhelmingly, 73% of you say no. 27% of you say no.


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[Assistant] Yes! This is, if there's any social compact in the United States, this is sort of the essence of the social compact.


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[Assistant] Everybody ought to be able to get ahead by working hard, by playing by the rules. But if you can't, something's wrong. Something's profoundly wrong. Now I don't know what is in your heads when you say no.


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[Assistant] But let's take a look at the way this question has been answered over the last 20 years. A random sample of Americans. Uh, well, most of them disagree with you. Most of them say, uh,


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[Assistant] They're satisfied with the opportunity to get ahead by working hard, but interestingly, if you look at the trend line,


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[Assistant] Just over the last 20 years, the trend line is downward, and anybody who has followed polls, particularly opinion polls, and they're flawed in all sorts of ways, but one thing that's interesting, and Gallup does this quite well, is that even a fall of 10% is significant. It signals something.


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[Assistant] By the percentage of children, now here I've got to explain again before I put this up and confuse you. We're going to look for each quintile, each 20% of income group, how easy it is for the children in that income group to get into a higher income group.


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[Assistant] And if you really want to look hard, what we're looking at here is a child born in the bottom 20% by income. 43% of those children


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[Assistant] Are stuck in the bottom. They never get out of the bottom 20%.


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[Assistant] By contrast, here, 40% of the children born in the top


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[Assistant] 20% in the top quintile are stuck at the top. They never get out of the top. They stay in the top. Now this is a picture


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[Assistant] These are the last, the most recent data we have that I have confidence in. I think things have changed a little bit. I'm not sure which direction. But the point is that relative to most other so-called rich nations,


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[Assistant] Depending on who you are born to,


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[Assistant] In terms of your income class, that says a lot about what you're going to be in for the next 20, 30, 50, 80 years.


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[Assistant] Or maybe it's positively true. I just put an evaluation in. I don't know whether it's sad to me. There are problems associated with lack of mobility.


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[Assistant] The percent of US children earning more than their parents at age 30. Now this is really important in terms of the morale and


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[Assistant] The sense of fairness and optimism.


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[Assistant] I was born in 1946 along with Bill Clinton and, and George W. and, and Donald Trump and Dolly Parton and, and Cher and, and that was a time when everybody assumed that they would do better and their children would do better than they did and they were right to make that assumption.


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[Assistant] Because most children and then grandchildren did better than their parents.


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[Assistant] You see how that can have an effect on


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[Assistant] Group psychology, the national understanding of the collective social compact. And if that stops, let's take a look.


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[Assistant] Let's take a look. Now we're talking about children born here, we're going up to 1984, children born in 1984, who by the age of 30 are now, you know, getting up there.


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[Assistant] They have their own children, they have their own careers, they have their own, uh, well, that's a pretty good way of viewing it. Well, let's see.


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[Assistant] Only half of children born in the early 80s were making more than their parents by age 30.


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[Assistant] In 1940, 1945, 92% of children were by the age of 30 earning more than their parents.


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[Assistant] Now finally, the last thing I'm going to talk about today is should we care? And the reason I even bring this up


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[Assistant] It's because there are a lot of voices out there that say we should not. And I want to talk to you about their argument.


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[Assistant] Because it's very important in this class, in your sections,


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[Assistant] Very important that we understand all of the arguments, and that we respect.


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[Assistant] Those arguments, but we have to at least understand what the arguments are. Uh, should we care? No.


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[Assistant] One of the no reasons why we should not care about widening inequality of


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[Assistant] Or to say that in a slightly less highfalutin way.


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[Assistant] Without inequality, or at least some inequality of income and wealth, there would not be enough incentive for people to invent. And create businesses. And create jobs.


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[Assistant] You need those incentives. That's what the argument would be. And when you do have incentives, when people are inventive, when Jeff Bezos and Elon Musk and a lot of others are creating and inventing, we all benefit.


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[Assistant] A dollar that goes to the very super wealthy.


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[Assistant] Is a dollar less than you, that you or somebody who is poor has a possibility of having or earning? No, it's not, it's not a zero sum. Their wealth doesn't depend on somebody else's poverty.


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[Assistant] We can all rise together. We could. We did. In the early, you know, between 1946 and 1980, you saw the graph.


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[Assistant] And so those people who say we shouldn't worry about it will say, well wait a minute, I mean there are things we should be doing, maybe about poverty, but we don't have to bring the wealthy down, we don't have to tax the wealthy, we don't have to, we don't have to worry about inequality.


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[Assistant] We can remedy poverty without reducing inequality or wealth. And we just focus on poverty.


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[Assistant] Since I came to the Bay Area, I've seen more and more and more poverty. It's evident to all of us. It's around us. There are more people living on the street.


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[Assistant] Well, this argument would be, if you want to do something about that, we can do it. Let's focus on getting that done. It doesn't mean we've got to.


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[Assistant] Reduce inequality because it's not a zero-sum game.


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[Assistant] And finally, the arguments of those who say don't worry about this are targeting the rich is socially divisive.


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[Assistant] Television not too long ago, uh, debating with a fellow who


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[Assistant] I served with in the Clinton administration named Larry Summers.


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[Assistant] And, uh, we were talking about this issue and Larry kept on saying, why do you continue, Bob, why are you continuing to attack the rich? That's socially divisive. Why are you doing that? We don't need to do that.


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[Assistant] I said I'm not attacking any individual person and I'm not even attacking the rich.


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[Assistant] So I want to play a little bit of a game. So occasionally in this class we'll do something that is a game. And the purpose of the game is to elucidate, to help you understand your own values and our collective


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[Assistant] Social contract. And this is a...


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[Assistant] I'm gonna play a genie, kind of a, an abstract genie, obviously, and when I snap my fingers,


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[Assistant] Here's the deal I'm gonna offer you, and you've gotta say whether yes, you'll accept the deal, or no, you don't want the deal. And the deal is, the top 1%, when I snap my fingers, becomes 20% richer.


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[Assistant] But wait, before you reject my deal. People in the middle become 3% richer.


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[Assistant] And people that are near the bottom remain the same as before. In other words, I'm gonna snap my fingers and nobody is worse off than they were before. Some people are better off. Some people are much better off. But I'm a genie.


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[Assistant] And my snapping my fingers is the equivalent of certain public policies, which we will talk about in the second half of the course. Uh, and I want to know from you basically whether you'll agree or disagree. So A is accept the deal and B is reject it. Ready? I'm about to snap. Go.


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[Assistant] Okay, let's end the bidding there, see whether you want me to stamp my fingers. Let's see. Go.


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[Assistant] Everybody is at least somebody is better off.


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[Assistant] In economics this is called a Pareto Improvement.


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[Assistant] A lot of economists and people who are persuaded by economists say this is unambiguously good. Well, I'm disappointed in you. At least those of you. Who, who voted against this?


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[Assistant] Wait a minute, it's not envy, but you want your piece of the pie, so you're willing to sacrifice the middle and everybody at the top? Alright, give you a better deal. Give you a better deal.


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[Assistant] Spring I got a better deal for you. And anybody else who didn't like my first deal, you'll love this one. And you'll like this one too.


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[Assistant] Uh, because here's my deal. Top 1% becomes 20% richer. That was what we had before. Uh, the people in the middle become 10% richer.


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[Assistant] Pretty much better than the 3%. And people that are near the bottom, 2% richer for spring. Spring, you got it, they're better off.


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[Assistant] Better off, better off. Aldo. Okay. Uh, and uh, so all those b- or accept, A, and B, reject. Go. Okay, let's end the bidding there, and let's just take a look. Well, more of you came along, but you're still, a majority of you, 58%, still reject my deal.


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[Assistant] So you're willing to, you're willing to give up an increase in the gains at the bottom? For what? Why? Who else besides Spring? Yes.


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[Assistant] Wait a minute, wait a minute, wait. There's no such thing as created wealth?


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[Assistant] You've got inventors, you've got an economy that is growing, I showed you how much the economy is growing, I mean you've got, you've got a way, all sorts of ways of more


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[Assistant] Lily, well what's your problem? Why don't you, you're willing to sacrifice the gains for people at the bottom?


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[Assistant] Okay, let me just repeat what I think you're saying so everybody else can hear it. You're saying that the wealth, these data on wealth or income increases or even my genie, it's not


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[Assistant] We're just taking from Peter to PayPal. We're taking from the environment. A lot of this has to do with the climate getting worse.


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[Assistant] And you don't like the fact that any increase in wealth at the top or anywhere is actually going to be at the expense of the quality of life for other people on the planet. That's what you're saying, isn't it?


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[Assistant] So it's not about so much inequality here, it's about the trade-offs globally and also in terms of climate. Right? That's sort of what I understand. Well I understand and I respect that and maybe you, Lily, and you, Spring, and others here,


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[Assistant] Would find what I'm now going to suggest, another quote unquote game.


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[Assistant] Particularly illuminating along those lines.


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[Assistant] You all are going to be divided into couples.


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[Assistant] I don't mean you are gonna have to live with a person, but next to you.


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[Assistant] Every one of you, just look to the person to your right or to your left. Okay? And if you don't have somebody to your right or left, if you don't have somebody to your right or left, then, then you better find somebody because you're gonna be pretty lonely in this, no you're not.


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[Assistant] Okay, here's the experiment. I want, I want you to divide up into couples of, and on my left, the person on my left is going to get, figuratively, a thousand dollars from me. Figuratively.


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[Assistant] In fact, let me give you the rules. This is very, and the rule, you know, one rule here is complete silence. This game is the only way to work if everybody's doing it in silence. This is a learning game.


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[Assistant] Uh, so, and rule is you form couples and the person on my left is person A and the person on my right is person B. So,


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[Assistant] Are you two? So you're A and you're B.


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[Assistant] Now if, if you guys are best friends, it's not gonna work. But you've gotta get into a mindset in which you don't really know each other.


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[Assistant] And this is a one time only exchange that we're going to be talking about, or deal.


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[Assistant] I offer a thousand dollars to A, and A offers a portion to B and writes it down in complete silence, and then B accepts by writing yes or rejects by writing no. And my thousand dollars offer goes through only if B accepts.


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[Assistant] So, what I'd like you to do in complete silence is to do this now.


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[Assistant] And when you're done, just put up your hands, and then I want to examine it. Your deal. When you're done, put up your hands, if you are, are, okay? Uh, okay.


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[Assistant] Now what I would like to do next is, and this is question number nine, if you were A, person A, I want to know how much you offered person B.


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[Assistant] Uh, now, A is more than $500.


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[Assistant] B is between ten and five hundred dollars, C is between one dollar and nine dollars, and D is zero.


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[Assistant] So again, this is only to be answered by A's. And let's take a look and see. Okay.


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[Assistant] Uh, the majority, vast majority of you were between 10 and 500, but we do have a few of you offered more than 500, and we've got 15 of you who offered between 1 and 9 dollars, and we've got


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[Assistant] 11 of you who offered zero.


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[Assistant] Now I would like to talk to somebody who offered between $1 and $9. Okay.


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[Assistant] 900, I mean, you forfeited a lot of money. Did you expect that your name


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[Assistant] Graham, did you expect that Graham would agree?


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[Assistant] But that's not my question. Did you expect Graham to agree to one dollar? No? Then why did you offer him one dollar? Well, you, you want to make a point?


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[Assistant] Oh, I see. You were going to make a point that Graham would be better off. But Graham, you rejected a dollar. Now, that means you could have had a dollar, Graham, and why did you reject the dollar? You would have accepted ten dollars.


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[Assistant] You can't do anything with a dollar? Yes you can. You could, you know, you could.


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[Assistant] Graham, wait a minute, I want to just make sure I understand. You would have accepted ten dollars.


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[Assistant] So I, well, so you, how do you feel about that?


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[Assistant] Anybody else, anybody else out there who offered sort of


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[Assistant] One dollar, ten dollars, nobody else, nobody. Well, I know you did because I have the evidence up here.


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[Assistant] What it was that made you think that B would accept


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[Assistant] B is better off than B was before, like we saw right here.


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[Assistant] Alright, let me ask a different question. Is there anybody who offered more than 500? Okay, right here. What's your name?


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[Assistant] Okay, you offered more than 500. Why did you offer more than 500?


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[Assistant] And you thought that offering less than 500 might jeopardize the whole thing. And your


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[Assistant] Yeah, and you, and you accepted, would you have accepted something less than 500?


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[Assistant] You, I'm sorry? You wouldn't accept anything?


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[Assistant] We are engaged in a little bit of an experiment about fairness.


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[Assistant] We all carry around in our heads some notion of what is quote unquote fair.


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[Assistant] And some of us have very strong ideas about fairness, and some of us have kind of mushy ideas about fairness, but in terms of the game we just did,


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[Assistant] We are putting ourselves in the position of somebody next to us.


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[Assistant] If you are an A person, but a B person, you are responding to your own sense of fairness or unfairness, and if you have a very, very strong sense of what's fair and unfair, you might say no, even to a very strong offer, if the offer is less than, say, $500. You might.


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[Assistant] And we could go on and on and I wish there were, there was time and I wish, uh, I could go.


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[Assistant] Interview you and we could all interview each other, but you understand that's essentially what we are doing.


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[Assistant] The purely Pareto improvement optimal assumption efficiency economics assumes that any gain by B would be enough to make that trade a good trade. Just like the genie. Nobody loses anything, everybody gains.


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[Assistant] But what intrudes on the genie game is the same thing that intruded for some of you on the little thousand dollar game we just did, and that is your own sense of something about it maybe being unfair.


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[Assistant] And what we need to do is unpack what that is.


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[Assistant] We don't have time to do that, maybe hopefully in your sections you can do it, but it's important because as we diagnose


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[Assistant] What has happened to the economy, what has happened to inequality, why we're concerned about inequality if we are, as we investigate


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[Assistant] Our notions of fairness or lack of fairness become profoundly important. And we've got to understand where they come from.


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[Assistant] Let me just end on this little anecdote. In 20, well when I was secretary of labor, I would,


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[Assistant] All the time go out to Ohio and Pennsylvania and North Carolina and other places where there are a lot of unionized workers and a lot of manufacturing workers and a lot of non-unionized workers. I didn't consider myself secretary of just unionized America. I was secretary of labor and I would go out and I would talk with


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[Assistant] Thousands and thousands and thousands of workers, hourly wage workers. And that was in 1990.


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[Assistant] Starting in 1993, four, five, six, seven,


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[Assistant] If you want to put it that way. I would talk to the, you know, how are you doing? How's your family doing? How's your job? And we'd get into their feelings about the system not treating them quite fairly. You know, the bosses are doing great. The executives are doing great. Uh, the stock market, blah, blah, blah, blah. And I pick up something everywhere I went.


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[Assistant] Two or three instances that are grandchildren, uh, and we would talk about just how they're getting on, we'd have these discussions, a free-floating focus group, but I'd ask them the same kind of questions, and what I picked up was much more anger.


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[Assistant] Is exactly what you saw in a lot of today's charts. They didn't put it in terms of these charts.


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[Assistant] They put it in terms of how they felt subjectively about


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[Assistant] The way the economy was run, the way the system was run, the way politics was being undertaken, the way the powerful people treated them


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[Assistant] They were not Democrats or Republicans. They didn't put Democrats or Republicans the first thing. They didn't.


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[Assistant] They didn't begin with their political philosophy. They just began with their, their feelings about how they were being treated. And they were angrier, substantially angrier in 2016 than they were 20 years before.


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[Assistant] And then I would ask them in 2016, well who are you interested in in terms of


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[Assistant] Presidency. I mean, we were just on the verge of the 2016 election. Uh, we were still months away. In fact, we were still before the nomination. But we were on the verge of the 2016 election. And I'd say, well, who's, who's interesting to you?


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[Assistant] And over and over and over again in Ohio and Michigan and Minnesota and North Carolina and I mean I would hear in Pennsylvania the same two names.


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[Assistant] Is directly and powerfully related to the subject of democracy and the quality and capacity of our country.


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[Assistant] To survive, whether you are worried about climate change or you're worried about anything else.


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[Assistant] Over the next 14 weeks is happening now.


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[Assistant] This is not an exercise in theory. This is an exercise in


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[Assistant] Understanding reality, understanding a system, a political economic system moving through time.


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[Assistant] That was a fair bit of experience here. Samira, Kristen, fourth time here, Khan. Well, you've already won a pin. Brendan, you know what it's like to want a pin. Yeah.


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[Assistant] You can taste is the instinct that you are going to nearly cook that for yourself. And that's why I taste so good.


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[Assistant] Here's where it's different. Two pantries today. Yep. This one, and a surprise pantry. Okay.


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[Assistant] Your choice today is whether to keep your 15 minute head start or whether to give it up.


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[Assistant] Time to reveal the surprise pantry. Can I do this without Matt Preston?


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[Assistant] Hey Ashley. Shannon. You're seeing me a little quicker today than what you normally would. Follow me. Yeah, right.


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[Assistant] Khan has decided to give up his 15 minute head start. Which means you both now have 60 minutes.


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[Assistant] However you can only use this pantry. This is going to be an interesting showdown.


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[Assistant] Both of you ready? Yes. Okay, your time starts now.


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[Assistant] A lot of ginger there, but too much. That ginger's a problem for me.


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[Assistant] Alright. Sure you're not going too sooner? I think so. Hmm, okay.


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[Assistant] Hey, looks nice. Two great looking dishes. Well done to both of you.


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[Assistant] Now really it all comes down to the judges. Yep. And what do they prefer?


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[Assistant] Shannon, what went on in the kitchen today? It was a really interesting day. First time I was ever involved where a contestant has given up their extra 15 minutes. Khan gave that up and in return he was given the opportunity to use two pantries.


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[Assistant] The stuff that Kirsten makes is crazy. Everything is so articulate and just so beautiful. So given that she's here, I know today's going to be a hard challenge.


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[Assistant] Today's definitely the most important elimination we've had so far. Number 11's not where you wanna go home, so I know there's gonna be a hell of a fight today. I shouldn't take all of them, should I?


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[Assistant] I see. And are you aware of what Nibelheim is now? Nope. No idea.


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[Assistant] Five years ago, Shinra assumed direct control over this village.


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[Assistant] It now serves as a treatment center for mako poisoning. All property rights have been transferred.


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[Assistant] If that's why you're here, contact special facilities at corporate. They'll be able to help you. Very helpful. Thank you, sir.


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[Assistant] I'm sure you're eager to see your hometown, but please, don't stay too long.


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[Assistant] Be that as it may, I can't let you in there myself. You'll have to ask my boss instead.


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[Assistant] Meaning the Deputy Commissioner? Or the Commissioner himself? Let's meet and greet.


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[Assistant] Deputy Commissioner Murasaki's up at the reactor, conducting an inspection for corporate. He's due back the day after tomorrow, but he hasn't been in touch to confirm. Could be he needs more time.


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[Assistant] This is really the last call for entries. Oh.


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[Assistant] Over here is the bird bat. The seeds on a stick stand.


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[Assistant] Can't believe Catherine Sabath is here today. She's an amazing cake decorator. I'm really excited to see what the pressure test is.


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[Assistant] I'm really worried about Jess's sponge because she dropped a little bit of yoke in it and uhm, I know from my experience it's really hard to get that yoke out.


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[Assistant] Don't worry. I'll make sure Babymo is asleep by the time you're back.


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[Assistant] I really hope this works. Here you go. You play, I'll sit. We've got this.


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[Assistant] He's asleep. Super quiet victory dance.


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[Assistant] But it's okay, because Humphrey figured out what to do.


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[Assistant] Looks like someone had a tiring night. Here you go, Humphrey.


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[Assistant] Anyone approaching English fiction of the 20th and 21st centuries will feel rather like the climber in the foothills of Nepal looking up at the summit of Everest. There's so much of this stuff.


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[Assistant] Mountainously more of a stuff than anyone could ever read.


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[Assistant] More is put out in a year nowadays, 12,000 titles in 2006, than even the best read among us could expect to read in a whole lifetime.


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[Assistant] Henry James' memorable image is a structure with many mansions. That word necessarily means rooms in its original meaning.


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[Assistant] Science fiction mansion, the romance mansion, the satire mansion, the social problem novel mansion, the epic mansion, the novella mansion, we're going to go on and on, the thriller mansion. And of course, perhaps one of the smaller mansion.


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[Assistant] What is awkwardly called the literary or quality novel.


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[Assistant] The novel that is, which we think repays study as well as just reading. It's something better than, than airport fodder.


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[Assistant] And is on that strand in the broad multi-weave fabric of modern British fiction, which we'll principally concentrate in this lecture.


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[Assistant] Good fiction. Quality fiction. Now, this doesn't mean that the rest of it is unworthy of attention. That is mere critical snobbery.


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[Assistant] What it means is that, that area, the whole novel is too large and life, or at least this lecture, too short to come to terms with it.


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[Assistant] But one can, one can, as it were, sort of read different kinds of fiction, uh, according to the situation in which one finds oneself. But today, quality fiction.


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[Assistant] Now Henry James, whom I've mentioned, supplies a good starting point. Born American, James died English by naturalization shortly before his death in 1916. And Henry James had a huge influence on the literature of his adoptive country, England.


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[Assistant] Jamesian theory, very briefly, can be summarized in his belief that it was less what the novelist depicted than how the novelist depicted it, which created what James called the discussable, i.e. worthwhile, kind of novel.


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[Assistant] James' other great doctrine can be summed up in his injunction, dramatize it, dramatize it.


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[Assistant] That is, the novelist should show, not tell.


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[Assistant] Thirdly, James took from the great French masters such as Flaubert the sense that form, spatial elegance, was very important.


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[Assistant] He wrenched English fiction away from what he called, memorably, the great baggy monsters produced in the infancy of the genre, as he saw it, by writers such as Dickens, Thackeray, George Eliot, and Hardy. He admired them, but he felt that they hadn't quite worked through because of historical accident.


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[Assistant] To a stage where there could be really sophisticated makers of fiction like himself.


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[Assistant] Now of course, Baggy Monsters continued to be produced by writers such as Arnold Bennett, who wrote a fine series of realistic comedies set in England's industrial black country. John Galsworthy, another example, whose Forsyte saga earned him


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[Assistant] I think one of the less deserved Nobel Prizes of the 20th century in 1932, or H.G. Wells.


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[Assistant] A very meritorious writer who in another department of his long and varied career was a father of modern science fiction as we saw in an earlier lecture, but he also wrote baggy monsters as well.


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[Assistant] But it was James who challenged British novelists to write better, to write more artistically, to set their aim.


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[Assistant] A bit higher than it had been, as James would think. Now, what James meant by how you tell, not what you tell, is demonstrated in his famous ghost story, The Turn of the Screw.


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[Assistant] It's narrated, this story is narrated autobiographically, not a form that James normally liked, but it's narrated autobiographically by a governess who's hired to look after two children in a country house. Shades of course of Jane Eyre.


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[Assistant] And like Thornfield, Bly is haunted. Or is it haunted?


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[Assistant] There was, it seems, in James' story, a corrupt former employee, Quint, who may or may not be spectrally present throughout, who may somehow have possessed the children, exorcist style. We're never quite sure. The screw is turned, but never to the point where we're convinced of what's happening.


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[Assistant] Perhaps the governess we suspect is mad or deranged. She's telling the story, but can we trust her? She's not a reliable narrator. The novel never gives us a clear answer, never resolves the enigmas with the revelation of a mad woman in the attic.


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[Assistant] Which of course, uh, Charlotte Bronte did give us.


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[Assistant] That the narrative, James' narrative concludes with the governess determined to exorcise little Miles, one of the children she's looking after, from the evil spirit of Quint. And she holds him in her arms, shaking him hysterically, until finally...


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[Assistant] He gave a frantic little shake for air and light. He was at me in a white rage, bewildered, glaring vainly over the place and missing wholly, though at now to my sense filled a room like the taste of poison, the wide, overwhelming presence. It's he!


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[Assistant] I was so determined to have all my proof that I flashed into ice to challenge him. Whom do you mean by he? Peter Quint, you devil! He then dies, mild eyes of shock.


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[Assistant] Who is you devil? Who is he talking to when he says you devil? Quint, whom the governess herself never sees, or the governess who has tormented the little fellow until his heart stops from sheer fear, saving him as she thinks, from


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[Assistant] What might be just a figment of her imagination. James creates an exquisite and delicate ambiguity. Which for the cultivated reader, is as horrifyingly thrilling as say any slasher movie featuring Jason or Freddy Krueger.


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[Assistant] Now, the line of James runs as a distinguished thread through the whole course of post-Jamesian fiction.


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[Assistant] He was that most remarkable thing, a master of narrative, and the most influential critic of his time.


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[Assistant] His criticism is grafted onto his own work as introductions to the so-called New York 1907 collective reissue of his novels.


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[Assistant] The principal disciple and friend of James is Joseph Conrad, whom we looked at earlier, uhm, in a previous lecture. Like James, a naturalized, not a born Englishman,


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[Assistant] Conrad was born in Poland, Teodor Kozianowski, and had a long career in the international merchant marina as a naval officer before retiring to England and writing fiction. Now, Conrad is firmly in what the British critic F.R. Leavis called the great tradition of the English novel, by which Leavis meant the moral tradition.


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[Assistant] It begins this tradition as Leavis mapped it out with Jane Austen and moves through George Eliot, Henry James, Joseph Conrad, and terminates with D.H. Lawrence. Thereafter, Leavis rather parsimoniously, I think, saw the English novel as a wizard branch, which of course it wasn't and isn't.


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[Assistant] D.H. Lawrence, about whom I'll be talking in a minute or two, summed up what the Great Tradition is all about when he called the novel, The One Bright Book of Life. In other words, it is a Bible for an age which, thanks to Darwin perhaps, had outgrown or grown beyond its predecessor, the actual Bible.


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[Assistant] Now one doesn't have to agree, but what is undeniable is that for these novelists, the great traditional novelists, the novel was an unrivaled instrument for the analysis of moral complexity. Why?


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[Assistant] Because the novel is situational. It doesn't work with simple abstract moral axioms, that shall not kill, for example. Most of us would go along with that, that shall not kill, yes, of course we shouldn't kill. But in Lawrence's novel, Sons and Mothers, the situation makes it right for the hero, Paul Morel, to kill his terminally ill mother.


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[Assistant] Thou shalt not commit adultery. That's another, you know, as one would say, sort of imperative. Most people will go along with that. Adultery is very bad.


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[Assistant] In Lawrence's Lady Chatterley's Lover, it is absolutely right and highly moral for Mellis and Connie to commit adultery. It's even a sacramental act in their particular situation.


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[Assistant] So the novel is a wonderful diagnostic tool for depicting the infinite moral complexity of life. It doesn't necessarily make us better people, that would be a preposterous thing to say, but it makes us more aware of the complexities.


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[Assistant] It is also particularly delicate. Only the novel, Lawrence argued, with a beautiful image, can catch the shimmering rainbow of human relationships. The extraordinary motility and volatility of what is, for example, love. What is it to be in love? Well, novels tell us that.


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[Assistant] This is the major enterprise in Lawrence's two greatest works, The Rainbow and its sequel, Women in Love. Now,


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[Assistant] The motto which I think sums up Conrad's projection of fiction, he too is a member of this great tradition, this great moral tradition, which I agree with Leavis, I think is very important in the kind of


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[Assistant] The great ensemble of novels that we have in the 20th century. Conrad's project is in the destructive element immerse. This is a phrase which I've used before. And it comes from Conrad's novel Lord Jim. And it can be paraphrased as, you have to live before you can live.