find out what's really happening to the global economy for a no holds barred look at the global financial headlines. on the record. talking back here's a recap of all the main stories we're covering for you today on our feet russia sounds the alarm over israel saying it could soon bar the rods of nuclear facilities all suppose warning that any such move would be a serious mistake the grave and unpredictable consequences. after nato spy for democracy in the libya the country's new chapter showing a surge in radical islam that strict sharia law and flags in evidence there from washington it seems are concerned about what's that spell that gadhafi is gone. and

that two russian tycoon titans are slugging it out over six and a half a billion dollars at their reputations at london's high court exile the businessmen but he's been absolved he wants the cash shells the football club owner among other bold vision claiming he was intimidated into selling investments on the cheap. after the capitalist pursuit of wealth left many people and nations with empty pockets cross-talk looks now what might make a more reliable way of protecting hard earned cash that's next on our. below and welcome to cross talk about tough love for a not so amicable divorce for well over a generation of voters and consumers around the world were told that democracy and

capitalism were natural partners building a prosperous and fair society that is being called into question today by millions feeling abandoned by the your call process while the same time capitalism appears to thrive a growing number of political regimes. cross-talk the capitalism democracy and i'm i'm joined by david psychotic in chicago he is a professor of philosophy at loyola university chicago in new york we have howard gold he's a columnist for market watch and founder of the independent agenda and in london we crossed to richard wellings he's deputy editorial director at the institute of economic affairs all right gentlemen this is cross talk that means you could jump in anytime you want and i very much encourage it but first is the capitalism democracy can do really on the rocks well we're certainly seeing massive amounts of discontent over the way this has been functioning and beginning at least with two thousand and eight the world and specifically its western part of the undergoing

a mental changes in its financial and political system ever since the credit crunch significant really undermined the global financial architecture the entire western paradigm which has for a long time assumed as one of its basic tenets the synergy between democracy and capitalism is now being seriously questioned the global occupy wall street movement is just one example of the solution remember the promise of representative elections and the free market system that's. never was. there but now it's. very widespread in the sense that everything is going on in the system that's consistent from. there's also ample evidence that capitalism is facing its greatest challenge since the great depression of the one nine hundred thirty s.

unlike other economic downturn and since then today western capitalism has seen the financial sector of the economy rebound even flourish without need for economic growth and jobs generation this is the informant in a sentiment that elected officials are acting league with big business and corporations. and it's in the interests of. america these. are all right now it's not work. and while millions in the arab world struggle to become part of a democratic process millions in the west say they feel disenfranchised from a political system that does little to address their grievances but as these protests point to a system in trouble it is the asian model of capitalism that is slowly emerging as an alternative that has worked with and be able to fish and see their mockery of course it's sounds good but in practice it. that's always

bring you the results and the spires economic results go history has demonstrated that capitalism is compatible with the clash with regimes of various stripes from nazi germany to right with leadership from south america the one nine hundred sixty s. and seventy's so will the western paradigm which is currently showing great in science and decline to the asian model or something more formidable or will the global wave of the sand prove capable of reversing its downfall one thing is clear is that once the dust settles things will be going back to business as usual or i don't think anybody will disagree with you on that first i'd like to go to richard in london and you say interests are served by the idea that free markets and democracy work together well i mean there are always. democracy there are a lot of special interest groups that arise especially since the start of the twentieth century when which to drift into political elites world socialism so as you say a huge growth in what the state does we've seen all these various vested interests rise and strengthened and that's really the problem that's why the people don't

feel they've got a voice because the special interests and i was so powerful ok david what do you think about whose interests are served here because if we look at all of the protest movements all around the world we have people that are saying they just feel absolutely disenfranchised and these are industrialized developed democracies that develop democracies around the world like to preach to everyone else became our proceed home isn't doing too well either is it. well you know i have long argued that capitalism really isn't compatible with narcolepsy but what we have now is not really good markers. we have we have something that i like to call poly arky drawing on. a concept that was developed by a couple you know political science history of. poly arche means you have. you have multiple parties you have relatively free and fair elections you have close to universal suffrage but it's not the mocker seat because the people really

aren't sovereign the system is set up so that although there are genuine differences between parties and polly or he's a lot better than tyranny. the people aren't sovereign there is a class that has at least as much power as the elected officials that is the capitalist class that is the upper one percent and this is always going to war going all the way back to plato plato does an analysis of democracy and he says in a democracy the people look around and they say hey there's a lot more of us then there are the rich people will redistribute the wealth this is always been a concern throughout there the rebirth of democracy in the late eighteenth century nineteenth century how does the wealthy elite keep its power while extending formal power to the people and it's very interesting and as long as the system is delivering the goods ok well apparently this is the united way it's not delivering the content with it but it's not delivering the goods of how or if i exactly if i

actually was doing this explosion of discontent let me go to howard in new york i mean it was i could just explain from what david had to say here is that it is democracy fictitious right now as it is composed as it works with capitalism because it seems like to me that. often democracy is just a legitimize thing factor a cover for the kind of economic system we have right now and the kind of inequality that we are seeing. hi i have to respectfully disagree ok i still think that the mock democratic free market capitalism gives people the best chance for both economic freedom and for political freedom because people have that chance they can organize they can get together they can vote we have any many number of times that that's happened no i do agree that there are real problems now and i think particularly in the united states you do have a system where money plays a disproportionate role in the political process and a lot of elected officials have to spend more than half their time raising money

and it makes them i think overly dependent on the special interests but i do think that democratic free market at the democracy and capitalism are compatible they were compatible from the very beginning the founders saw it john locke saw it some of the original thinkers behind it saw it and so i i believe that we have to work on ways of reforming the system and i think during crises the system comes under strain we saw it in the thirty's we saw it in the sixty's and in the early seventy's and we're seeing it now but i believe that out of it will come reforms that will make it better but still not ok well i mean we're going to richard if i go do you want what is the impetus for reform here i mean because the rich just keep getting richer and it's quite interesting people they call themselves capitalists like the status quo they don't want things to change because they just want to protect their wealth it's not in for a really ideological it's very materialistic. that's true but i think the impetus for reform will come because the situations so eventually there will be huge

pressure to kind of reform some of these i mean trench special interest is very difficult every time you try to reform there's always huge resistance so if you try and reform say the banking system in this cozy relationship between central banks and the and the major private banks that cause the credit crunch this is going to be hugely difficult to reform something like this but the point is these economic crises at a time when radical change can actually happen ok david i mean you have great eyebrows ok i don't know if you're disagreeing or agreeing go ahead i get the sense you're not agreeing with what we're hearing right now. well i think the problem is deeper than just the crisis of democracy i think what we're seeing is a real crisis of capitalism. i think. for a long time for the twentieth century certainly the nineteenth century the capitalist class had a rational core to it people that were concerned about keeping the system as

a whole functioning and solving the problems that exist and so on i think right now we are in such a crisis that the rational capitalist really don't see any solution to these problems they don't see how we're going to solve this problem of increasing increasing increasing unemployment it's clear that when you start talking about osteria the as a solution to an economic problem which means laying people off making people in more insecure they're not going to be able to buy as many goods as they could before it's only going to be make making things worse and in addition i think they see we've got this global ecological restoration of all those things i mean i think the rational capitalism just given up and are stuck killing aside and letting the crazy you reach your dorm job and what about howard schultz of starbucks there you know what about warren buffett what about howard schultz of starbucks there are many many people who are who are quite wealthy who are saying yes i do want to pay more tax raise my taxes so that so that we can have

a fairer society so that we can maintain the programs we need so that we can get the country moving again i think obviously there are plenty of people that you describe but i think to sort of put this whole generalization on the capitalist class i think is very simplistic ok david you want to do you want to reply that i know go ahead richard you want to do is just i mean richard the rational i'm sorry let's go to rear its head richard in london go ahead go ahead i think you're making a mistake here because of course we don't have anything like free market capitalism in the west and so government expenditure now makes up around the economy and then you've got all the you the regulations. he says we've come a very long way from free market capitalism and if we start talking about fairness and even more redistribution we're just going to kill off the whole system of free markets we're going to destroy private property we're going to destroy the wellsprings of prosperity so i think this is what a lot of very dangerous talk all right do you want to jump in there before we go to the break go ahead well as far as free market capitalism the reason we don't have

free market capitalism is because laissez faire capitalism doesn't work it led us to the great depression and we're seeing it now laissez faire capitalism simply means there's no restrictions on how wealthy the wealthy how much wealth the wealthy can accumulate and then people are surprised that when you have this massive inequality of wealth and that wealth and infiltrates we're talking about. going to that short break we'll continue our discussion on capitalism and democracy state party. from los angeles to chicago to birmingham twenty trauma centers have closed since two thousand severe problem is not enough inpatient beds not enough urgency

department heads and not enough nurses from members that's to take care of all the people who are the only real health care system that we have in the city of los angeles is the los angeles fire department in fact when i started my venture is a firefighter i didn't want to turn it around so i started out wanting just to firefighting it's about eighty two percent of what we do the full article in this medical i've got a rescue couple weeks ago waited four hours for i've waited sometimes three hours but i was it's a same francis and living with her for hours and fifty minutes standing against the wall of the patient and we have a federal law that mandates that you can't turn no one away who seeks care in the emergency room. we have the most expensive health care system in the world and it's probably valued the least.

more news today violence is once again flared up. these are the images koch world has been seeing from the streets of canada. chunk operations are old today. kate. welcome back cross talk i'm curious about remind you we're discussing whether capitalism and democracy are still compatible. ok howard if i can go to you i mean looking at the reform of capitalism and how it

relates to democracy how can we continue with privatizing profits while socializing risk because for it we want to use the term cow clap capitalist class or the system or whatever that seems to be the status quo right now too big to fail the rich people are saved and everyone else is left to fend for themselves and that's exactly what it looks like right now and north america and in the eurozone. well a lot of people feel that way but i think we ought to differentiate between the banking and financial system and the and the larger economy because i think there's a lot of interesting innovation going on in the larger economy that i think is extremely beneficial and i look at apple as an example and i know there's a downside to some of that of course but i think the banking system in particular really went way out of control and i think there was not enough regulation of the banks so that was very very clear and they basically became too big to fail and took of the system with them however there are some very quiet changes i think dodd frank is really going to create some teeth and regulating the banks and making them

take on more capital and the basel three international agreement is making banks take on a lot more capital too and we're seeing in europe a lot of the problems with that because these banks are worried that they're not going to be able to raise enough capital to still remain in good shape but they are being put under a very stricter regimen and they are not going to be allowed to do so i mean if i were now to try to see my decision to create a french opinion not enough how does that affect the average person all of the things you just mentioned ok how is that going to create employment because this is what people are protesting against i don't know if it will create employment you know i think that is what's the point of the employment situation comes very very well the point of it is because we don't want to take the system down again like they did before and we don't want them to have a disproportionate scale of the national golf we need to rebalance the economy and i think some of those steps are very important in doing that i think on the employment situation there are some very important structural factors here number one globalization the rise of china and india has been

a major factor and i think technology has changed things dramatically so the jobs that used to be done by people are now being done by machines these are big problems that we need to address and i think the way we need to address them is to increase the education of people and maybe change the culture so that education and technological wariness are ruled. warded and and really liar by the population like they are in parts of asia ok if i'm going to richard here can you have a very strong ok ok i know i know what you're thinking david when i go to richard. richard can you have a very strong a democracy when there is so much inequality when it comes to income because it's getting worse and worse we haven't seen these levels since the start of the great depression well let's put this in historical perspective i mean even the poorest people are far far rich than they were say fifty or one hundred years ago so free market capitalism to the extent it's been allowed to operate has been hugely successful at lifting people out of poverty and so i think really people are

sensible enough when they decide when they vote and want to look take a longer view and especially in some of these countries like ireland where they've had recent and even despite of the current crisis a huge huge should better off than they were twenty or thirty years ago so let's look at a longer perspective and also let's look at the terrible alternatives to cuts alyson so some of the disasters we've had when socialism's been active in say soviet russia or china so that's where we've got to look at what all the alternatives ok what are the alternatives go ahead. well i think it's a about better that's what i've been spent most of my academic life writing about how you could have a viable democratic economy and economic democracy extending democracy into the workplace expanding democracy into investment priorities and things like that but back in the crisis i think it's a mistake to say the crisis is due to the financial sector the financial sector is a symptom of the problem a fundamental problem partly it's globalization and technology those are really

crucial things but if you look at wages and productivity you see that since the post-war period productivity has been going steadily up about one thousand nine hundred seventy five wages went up to real wages and they've been flat since then and even declining you've got this gap between what workers have. what is being produced how did the workers then buy these goods well the capitalist class decided we don't want to pay them wages will loan them the money we'll grant them credit cards will grant them home equity loans and so on and so forth so you get this massive financial bubble developing but the problem is technology in the problem is technology and. i don't see any solution to within the framework of capitalism and that is this issue of unemployment marx pointed out long ago that technology tends to the capitalists have an incentive to replace labor by labor saving technology

the assumption that the free marketeers always have is ultimately those people will just find other jobs or if we just educate them then they will find other jobs the problem is those jobs are not being created the capitalist system got our huge boost in the twentieth century by accident there were new technologies that came along massively transformative technologies that also employed massive numbers of people think of the automobile industry to came. along if you had to build cars you had to build an interstate highway system you had to set up gas stations all over the place nothing like that's on the horizon you're saying there that knowledge is limited wonderful ok going to be rewarded for not creating jobs our jumping ahead yet in the united states we had twenty two million jobs created in the nineteen ninety's so in our recent history there's a time when we did create jobs i think there are some major i agree with you there are some major structural factors that need to be addressed but i don't think we

can go back to the days of the of the auto industry when it was just starting i mean we're just not at that level we have to find a way to get our population in the advanced countries trained and ready to add high value added. labor and contribution to innovation that's where our future lies we can't go back to having to having textile mills and having things like that that that employ a large number of people who are unskilled or rich or to find out you and i want to . go out and you know well i think that that's also i think that's the wrong direction all right the problem is the politicians and bureaucrats they don't know what the future's going to hold so so so do they can somehow plan what they train in advance it's a very dangerous trust and it's likely to lead so huge race but going back to what dave was saying i think he's completely wrong about the trajectory of western economies actually was destroyed income growth in western economies and the huge growth of the state since the one nine hundred sixty s.

so governments now spending government spending now roughly half the economy in most western countries a huge increase in regulation it's not surprising that incomes of stagnated in this context. ok david you want to you want to jump in there now it could be huge growth of the state stop it started back in the one nine hundred forty s. with world war two and continued on into the seventy's and eighty's and that was the most glorious sheen time of capitalism this was capitalism is golden age when you had massive state involved in setting up welfare programs building the interstate highway system and so on but the fundamental problem with capitalism now no we don't want to go back to the horse and buggy days we've got to have a system that will give us more redistribute this labor saving so that we have less hours that we have to work we have shorter time more free time there's nothing in the structure of free market capitalism that will translate increased productivity into more leisure time for everybody it translates it into more and more unemployed

people in those that still have their jobs had me to work harder and harder than ever because they're more insecure than ever ok how many want to go to because i know i don't want to gentlemen i don't want to get the elements of democracy in this program so i want to go to howard here do you think that the democracy in the united states in the media richard can talk talk about the u.k. is strong enough to make change the way elites run society in culture and society because you know a lot of people say when you look at the financial crisis of two thousand and who went on trial for that mess who will who's been punished for what happened ok it's just all papered over and everyone's bailed out and the result is kind of strong fit for tens of millions of people but the system protects itself is the democracy strong enough for the united states to make people be held accountable for what happened in what is happening. well it's a good question and i totally agree with you on that point that i think not enough of the finance years were held accountable i mean there are obviously legal issues

involved but it's hard for me to believe that nobody nobody could have been charged and brought to trial for some of these things i do think though that there are mechanisms here and there are very very difficult changes very difficult and i do agree there are a lot of entrenched interests that prevent change but i think we've seen some examples where there has been some mobilization one example in the states of wisconsin and ohio republican governors came in last year and imposed draconian changes on public service unions and unions normalized that they got people together they went through door to door with petitions they got recall elections on the ballot they were they had some success in wisconsin and now they are trying to overturn a lot of the changes in ohio and their chances look pretty good so i think there are some examples we've seen i it's a very big and very difficult thing to do but i do think it's ok richard prime minister cameron didn't want to have a referendum on the u.k.

pulling out of the euro out of the european union excuse me while two thirds of the populated voting population and britain would like to have that kind of vote why he did that's another example where democracy doesn't work because it's the interest of big business and banks are being served first and foremost well i'm not sure that's strictly true if you look at most western countries then they spend huge amounts of thinking on welfare states and it's not clear exactly how the welfare states actually helps bankers in the bridge i also think it's wrong to consistently blame the bankers for the economic crisis i mean that's looking at it since and rather they seem to benefit the most from this crisis haven't they i mean they've rebounded well a lot of. a lot of bank shareholders have been completely wiped out with a lot of these banks be nationalized and so on so they certainly haven't benefited but the actual major cause actually the central banks and governments flooding the markets with liquidity in the early two thousand is actually really is also new the

state that's really responsible and states responsibility for the crisis not a lot of the regulations on the financial sector are completely counts religiousness for yourself and i find it very hard to believe that only the government is responsible for this kind of a i mean look this is a very complex crisis many years in the making and i do agree that a lot of government policies contributed to it but that only gets you to two thousand and six you don't get to two thousand and eight without the big banks like goldman sachs and. you wish we had more time because this is how you seem to mind here is when these we run out of time gentlemen we run out of time many thanks to my guest today in chicago new york and in london and thanks to our viewers for watching us here are to see you next time and remember us talking. to.

wealthy british style sons of us from time to time.