Traditional Retail vs. E-commerce with Mark A. Cohen | Bob Herbert’s Op-Ed.TV


♪ [THEME MUSIC] ♪>>>HI, I’M BOB HERBERT. WELCOME TO OP-ED TV. ONLINE SHOPPING HAS COME INTO IT’S OWN AND THIS IS CAUSING ENORMOUS DISRUPTIONS IN THE TRADITIONAL RETAIL INDUSTRY, SHOPPING MALLS AND DEPARTMENT STORES CLOSING AT AN ALARMING RATE. STAGGERING JOB LOSSES OCCURRING. THE MOST FAMOUS BRAND NAMES DISAPPEARING. IS THIS JUST PART OF THE ORDINARY BUSINESS CYCLE, OR ARE WE WITNESSING A FUNDAMENTAL CHANGE IN THE BEDROCK ELEMENTS OF AMERICAN CULTURE AND THE U.S. ECONOMY, THE WAY WE SHOP? I’LL TALK ABOUT THIS WITH MY GUEST, MARK COHEN, A FORMER SEARS EXECUTIVE WHO HEADS THE RETAIL STUDIES PROGRAM AT THE COLUMBIA UNIVERSITY BUSINESS SCHOOL. MARK, WELCOME. NICE TO HAVE YOU.>>NICE TO BE HERE.>>THERE’S BEEN A NUMBER OF ARTICLES RECENTLY SUGGESTING WE’RE AT A TIPPING POINT IN THE RETAIL INDUSTRY IN THIS COUNTRY. ONE ARTICLE ACTUALLY HAD A HEADLINE SUGGESTING WE’RE APPROACHING A RETAIL APOCALYPSE. WHAT, IN FACT, IS GOING ON? ARE WE AT SOME SORT OF TIPPING POINT?>>I THINK WE ARE. I THINK WE’RE SEEING EVERY MANIFESTATION YOU CAN IMAGINE OF ENORMOUS CHANGE IN THE INDUSTRY. IN THE ’50s AND ’60s, THE GREAT AMERICAN SHOPPING MALL EMERGED, AND IT HALLOWED OUT HUNDREDS OF DOWNTOWN BUSINESS DISTRICTS ACROSS THE UNITED STATES.>>RIGHT.>>IN FACT, WE’RE SITTING IN A STUDIO THAT USED TO BE THE ALTMAN DEPARTMENT STORE.>>USED TO BE A GIANT DEPARTMENT STORE, RIGHT?>>THAT’S RIGHT.>>VERY FAMOUS.>>THAT SEA CHANGE OCCURRED OVER SEVERAL DECADES. THOSE SHOPPING MALLS WERE OVERBUILT. THEY FOLLOWED THE PATH OF DWIGHT EISENHOWER’S INTERSTATE SYSTEM. EVERY OFF RAMP SAW THE OPPORTUNITY TO ESTABLISH SOME KIND OF A MALL. NOW WE’RE SEEING THE INTERNET DO THE SAME THINGS TO THE SHOPPING MALLS, SO THIS IS ANOTHER TIPPING POINT. THIS IS POSSIBLY OF MORE CONSEQUENCE THAN THE ESTABLISHMENT OF MALLS IN THE FIRST PLACE THOUGH.>>ONE OF THE BIG DEALS, OF COURSE, HAS TO DO WITH THE IMPLICATION OF EMPLOYMENT, AND WE’RE SEEING SUBSTANTIAL JOB LOSSES IN THE RETAIL INDUSTRY. CAN YOU TALK ABOUT THAT A LITTLE BIT?>>WELL, SHOPPING MALLS ARE LOCAL. THEY ARE LOCATED IN CLOSE PROXIMITY TO RESIDENTIAL COMMUNITIES WHO FORM THE BASIS OF THE CUSTOMERS, THE CUSTOMER AUDIENCE, IF YOU WILL. MOST SHOPPING MALLS ARE STAFFED BY PEOPLE WHO ARE ALSO LOCAL, WHO COME FROM THE COMMUNITY THAT SURROUNDS THOSE MALLS. AS THESE MALLS, PROBABLY A THOUSAND OF THEM AT RISK, ARE SLOWLY SHUTTING DOWN, BECOMING LESS POPULAR, AND IN SOME CASES, ACTUALLY CLOSING. THEY ARE LOSING THEIR CUSTOMER BASE, AND THEY ARE LOSING THEIR EMPLOYMENT ROLLS. THE PROBLEM IS THESE FOLKS ARE OFTEN UNABLE TO MIGRATE SOMEWHERE ELSE. THEY ARE NOT ABOUT TO DRIVE 50 TO 100 MILES TO A DISTRIBUTION CENTER REPRESENTING AN INTERNET RETAILER WHO IS HIRING PEOPLE. SO THERE’S THIS ENORMOUS DISRUPTION AND DISLOCATION THAT’S OCCURRING.>>WE’VE BEEN LOSING TENS OF THOUSANDS OF THESE JOBS EACH MONTH OVER THE PAST FEW MONTHS, RIGHT?>>WE HAVE. I THINK IT’S GOING TO CONTINUE RIGHT THROUGH THE END OF THIS YEAR.>>NOW, YOU DESCRIBED THESE — WHAT’S GOING ON IN THE INDUSTRY AS A ROLLING CRISIS, WORKERS LOSE THEIR JOBS, AND THEY, IN TURN, SPEND LESS MONEY, THAT HURTS THE INDUSTRY FURTHER. TALK ABOUT THAT. WHAT ARE THE IMPLICATIONS OF THAT FOR RETAIL OVERALL, NOT JUST THE TRADITIONAL RETAIL OUTLETS?>>WELL, THE BACKDROP IS 70% OF ALL OUR ECONOMIC ACTIVITY IS DIRECTLY OR INDIRECTLY RELATED TO THE RETAIL INDUSTRY. AS FOLKS LOSE THEIR JOBS, THEY HAVE LESS DISPOSABLE INCOME. THEY SPEND LESS ON RETAIL ESTABLISHMENTS THAT THEY WOULD NORMALLY COME IN CONTACT WITH, AND SO THERE’S A RIPPLE EFFECT THAT’S PRONOUNCED. SOMETHING WE’VE SEEN WHEREVER INDUSTRIES HAVE BEEN IN TRANSITION. WHEN THE AUTOMOTIVE INDUSTRY WENT THROUGH TRIALS DECADES AGO, MICHIGAN WAS HOLLOWED OUT. THE EFFECTS WERE FAR MORE PERVASIVE THAN JUST THE AUTOMOTIVE BUSINESS ITSELF.>>WE’RE STILL SEEING THOSE EFFECTS TODAY.>>YES, WE ARE.>>NEW JOBS ARE BEING CREATED WITH THE ADVANCE OF ONLINE SHOPPING. JOBS IN TRANSPORTATION, YOU MENTIONED THESE GIANT WAREHOUSES WHERE GOODS ARE STOCKPILED AND THAT SORT OF THING. TO WHAT EXTENT WILL THAT OFFSET SOME OF THE HARSHER ASPECTS OF THE JOB LOSSES IN THE TRADITIONAL STORES.>>THERE’S A DISCONNECT GEOGRAPHICALLY. BECAUSE DISTRIBUTION CENTERS SERVE INTERNET CUSTOMERS ARE TYPICALLY LOCATED WELL AWAY FROM POPULATION CENTERS, AND SO FOLKS WHO ARE LOSING THEIR JOBS WORKING IN THE MALL ARE NOT LIKELY TO BE ABLE TO MIGRATE TO A LOCATION THAT’S CONSIDERABLY FURTHER AWAY. IN ADDITION, THE JOBS THAT ARE BEING CREATED ARE ENTRY LEVEL, LOW WAGE, MINIMUM WAGE, THERE’S AN ENORMOUS AMOUNT OF AUTOMATION THAT’S INTRODUCED IN THE JOB DISTRIBUTION CENTERS, AND SO THERE’S NO DOUBT OPPORTUNITIES THAT THE INTERNET IS CREATING THAT IT’S NOT ON A ONE-FOR-ONE BASIS.>>NOW, YOU TOUCHED ON THIS, BUT THE LOSS OF THESE RETAIL STORES AND THE — WHAT’S HAPPENING WITH THE SHOPPING MALLS AND THAT SORT OF THING, HAS AN EFFECT ON THE REAL ESTATE MARKET AND EVEN SPECIFIC NEIGHBORHOODS. HOW DOES THAT WORK?>>THERE’S NOTHING MORE INSIDIOUS THAN STORES THAT ARE CLOSED. WHEN AN ANCHOR STORE IN A MALL CLOSES, IT PUTS A TREMENDOUS — CAST TREMENDOUS CLOUT OVER THE MALL. IT MAKES THE MALL LESS ATTRACTIVE. FOOTSTEPS DIMINISH. THAT CREATES A NEGATIVE CASCADE OF EFFECTS. SPECIALTY STORES INSIDE THE MALL BETWEEN THE ANCHORS START TO CLOSE. SO, YOU KNOW, THERE’S NOTHING MORE DANGEROUS FOR A REAL ESTATE DEVELOPMENT THAN EMPTY SPACES.>>THESE EMPTY SPACES, THEN, HAVE A TOXIC EFFECT ON THE ENTIRE NEIGHBORHOOD.>>THEY DO. UNLESS SOMEONE STEPS IN AND REDEVELOPS THEM. THERE’S SOME EFFORT GOING ON. THERE HAS BEEN FOR SOME TIME TO CREATE LIFESTYLE CENTERS OUT OF TRADITIONAL SHOPPING MALLS, INTRODUCING ENTERTAINMENT, RESTAURANT VENUES OF THAT SORT, BUT AT THE END OF THE DAY, THERE’S FEW OF THOSE THAT HAVE BEEN SUCCESSFUL WITH THE VAST MAJORITY JUST BEING HALLOWED OUT.>>WHAT I FIND INTERESTING ABOUT THIS SURGE OF ONLINE RETAIL IS THAT IT WASN’T THAT LONG AGO AN AWFUL LOT OF PEOPLE WERE WEARY ABOUT PUTTING THEIR CREDIT CARD INFORMATION ON THE INTERNET. THEY DIDN’T WANT TO JUST POP THE KEYS IN THE COMPUTER AND SEND OFF TO THE STRANGE FORCES, YOU KNOW, ALL THIS DATA ABOUT THEIR CREDIT AND THAT SORT OF THING. THAT HAS, OBVIOUSLY, SUBSIDED, AND PEOPLE ARE NOW DOING IT WILLIE NILLY. WHAT IS IT THAT PERSUADED SO MANY MILLIONS OF PEOPLE, WELL, YOU KNOW, IT’S FINE TO PUT YOUR CREDIT CARD INFORMATION IN THERE?>>I THINK CUSTOMERS HAVE BEGUN TO REALIZE IN ENORMOUS NUMBERS EVERY TIME THEY USE THEIR CREDIT CARD, EVERY TIME THEY HAND THE CREDIT CARD TO A WAITER, WAITRESS, THEY RELINQUISH ELEMENTS OF THEIR IDENTITY, ESSENTIALLY NO DIFFERENT THAN KEYING IN THEIR ACCOUNT NUMBERS ON THE LAPTOP, IF YOU WILL. SO I THINK THAT THE CONCERN HAS ABATED. IT ESSENTIALLY HAS GONE AWAY. IN ADDITION, THERE WAS VIEW 20 YEARS AGO THAT NO ONE WOULD EVER WANT TO BUY ANYTHING BUT A BOOK OR MOVIE OVER THE INTERNET. AFTER ALL, WHO WANTS TO SHOP THAT WAY? HERE WE ARE, VIRTUALLY NOTHING THAT PEOPLE WILL NOT SEEK VIA THE INTERNET.>>WELL, IT’S REALLY TRUE, SHOPPING WAS PART OF THE AMERICAN LIFESTYLE. PEOPLE REALLY GOT A KICK OUT OF SHOPPING, BROWSING. I MEAN, I STILL LOVE TO BROWSE IN BOOKSTORES, EVEN THOUGH THERE’S FEWER AND FEWER BOOKSTORES, BUT WHAT HAPPENED TO THAT ASPECT OF AMERICAN LIFE? ARE PEOPLE JUST NOT INTO SHOPPING IN REGULAR STORES AS MUCH AS THEY ONCE WERE? IS IT NOT AS MUCH FUN?>>I DON’T THINK BRICK AND MORTAR SHOPPING IS GOING TO DISAPPEAR. I THINK THE SUPER REGIONAL MALLS THAT ARE FULLY TENANTED, THAT DON’T HAVE ENOUGH PARKING ON WEEKENDS WILL ALWAYS BE AN ATTRACTIVE DESTINATION FOR CUSTOMERS, BUT THEY HAVE AN ALTERNATIVE, SO FOR BROWSING THAT’S NOT CONSEQUENTIAL OR FOR FAMILIES WHO ARE TIME STARVED, THIS IS AN EXTRAORDINARILY MORE CONVENIENT WAY TO SEE WHAT’S OUT THERE AND DETERMINE WHAT THEY’D LIKE FROM THE COMFORT OF THEIR LIVING ROOM.>>RIGHT. THAT’S ONE OF THE GREAT ADVANTAGES OF SHOPPING ONLINE IS IT’S SO CONVENIENT, BUT, ALSO, IT’S GENERALLY SIGNIFICANTLY CHEAPER, SO PEOPLE PAY CLOSE ATTENTION TO THE PRICING, OBVIOUSLY. OTHER DOWNSIDES TO SHOPPING ONLINE?>>WELL, PRICING TENDS TO BE CHEAPER BECAUSE THE INTERNET PLAYERS, FOR EXAMPLE, AMAZON, FOCUSES ON EVERYDAY LOW PRICES. THAT WAS THEIR REASON FOR ENTERING THE SPACE IN THE FIRST PLACE, CONVENIENCE AND PRICE. NOW IT’S CONVENIENCE, PRICE, AND BREATH OF ASSORTMENT, SO THERE’S NOT A LOT OF COGNITIVE DISSONANCE WHEN YOU SHOP ON THE INTERNET. PRICING IS TRANSPARENT. YOU CAN GO FROM SITE TO SITE TO SITE LOOKING AT COMPARATIVE PRICES AS OPPOSED TO HAVING TO WALK UP AND DOWN THE MALL OR VISIT SEVERAL DIFFERENT MALLS TO SEE WHAT YOUR CHOICES MIGHT COST YOU.>>RIGHT.>>SO THIS IS AN ENORMOUSLY EFFICIENT WAY FOR CONSUMERS TO MAKE DECISIONS BASED UPON PRICE.>>NOW, WHEN I THINK ABOUT PEOPLE BUYING CLOTHING ONLINE, WHICH IS AN — HAS BECOME AN ENORMOUS ASPECT OF ONLINE RETAIL, THERE’S SOMETHING ABOUT WHEN YOU SHOP — WHAT I THINK OF AS A NORMAL OR TRADITIONAL STORE, YOU — YOU THINK ABOUT THE FIT THAT YOU’RE GETTING. YOU GET — YOU CAN EXAMINE THE TEXTURE OF FABRICS AND THAT SORT OF THING, HOW DOES THIS SHADE LOOK VERSUS THAT SHADE OR SOME OTHER COLOR. YOU DO LOSE SOME OF THAT, OR A LOT OF THAT, I WOULD THINK, IF YOU ARE SHOPPING ONLINE, AND YOU HAD MENTIONED TO ME ABOUT RETURNS. YOU WERE NOT SPEAKING SPECIFICALLY ABOUT CLOTHING, BUT RETURNS IN GENERAL OF SHOPPING ONLINE. IS THAT A BIG PROBLEM?>>ENORMOUS PROBLEM, AN ENORMOUS CHALLENGE. SOME CUSTOMERS WILL ALWAYS WANT TO TOUCH, FEEL, AND TRY THE THINGS THAT THEY ARE CONSIDERING BUYING, BUT, ALTERNATIVELY, THEY SIT IN THE LIVING ROOM IN THE MIDDLE OF THE NIGHT IN THEIR UNDERWEAR AND ORDER A SIZE MEDIUM, LARGE, EXTRA LARGE, A BLACK, A BROWN, A NAVY, WHILE PAYING NO SHIPPING CHARGES, RECEIVE WHAT THEY’VE CHOSEN A DAY OR TWO LATER, AND THEN RETURN, MOST OF IT, ALL OF IT, SOME OF IT, ALSO AT NO CHARGE, SO IT’S NOT THE SAME AS ACTUALLY SLIPPING ON SOMETHING IN A FITTING ROOM, COMING OUT IN FRONT OF A MIRROR AND CHECKING IT OUT, BUT FOR MANY PEOPLE, IT’S A MUCH MORE CONVENIENT AND INTERESTING WAY TO SHOP THAN WHAT WE ARE USED TO IN THE PAST.>>NOW, ONE OF THE THINGS THAT’S REALLY INTERESTING IS THAT AMAZON, SUCH A DOMINANT FORCE IN THE ONLINE INDUSTRY, IS ACTUALLY OPENING BRICK AND MORTAR STORES, AND IF I’M NOT MISTAKEN, A LOT OF THEM. WHAT’S GOING ON THERE? IF THE RETAIL INDUSTRY IS IN SOME SORT OF SLIDE, WHY DO WE SUSPECT AMAZON MIGHT DO WELL THERE?>>WELL, THIS MAY, IN FACT, BE A BIT OF A HEAD FAINT. THERE WAS A RUMOR THEY WERE GOING TO OPEN 2,000 BOOKSTORES, AND I THINK THE RUMOR CAME FROM THE REAL ESTATE INDUSTRY HOPING THEY WOULD OPEN 2,000 BOOKSTORES. THEY ARE OPENING BOOKSTORES, BUT I THINK THEY ARE ACTING AS SHOWROOMS FOR THEIR TECHNOLOGY PRODUCTS, PRINCIPALLY THEIR KINDLE AND FIRE TABLETS, AND, OF COURSE, THIS NEW DEVICE, THIS UBIQUITOUS AMAZON ECHO, WHICH I THINK, IS A FASCINATING PORTAL INTO THE AMAZON MARKETPLACE.>>TALK ABOUT THE ECHO A LITTLE BIT.>>SO THIS IS THE FOREFRONT OF ARTIFICIAL INTELLIGENCE. RATHER THAN SIMPLY LISTEN TO MUSIC COMING FROM A SPEAKER THAT SITS ON A SHELF OR SITS NEARBY, THIS IS A DEVICE THAT YOU CAN HAVE A CONVERSATION WITH, AT LEAST AT A RUDIMENTARY LEVEL. YOU CAN TALK TO IT, ASK IT TO DO SOMETHING FOR YOU, AND IT’S INCREASINGLY AIL TO RESPOND. IF YOU ASK FOR MOZART, IT WILL EFFORTLESSLY PLAY YOU AN ENDLESS SELECTION OF MOZART. IF YOU ASK FOR LOCAL NEWS, THE WEATHER, OR THE BASEBALL SCORES, IT WILL RESPOND ALMOST AS IF IT’S A COMPANION. NOW, IT’S AN EARLY STAGE TECHNOLOGY. IT’S AN EARLY STAGE DEVICE. I THINK THIS IS THE PORTAL FOR THE FUTURE. THIS IS THAT BRAVE NEW WORLD OF ROBOTIC COMPANIONS, I THINK WE’RE SEEING THE FIRST MANIFESTATIONS OF.>>YOU’RE TELLING THIS TO SOMEBODY WHO, DECADES AGO, HAD STACKS AND STACKS OF 45s THAT HE WAS PLAYING ON THIS LITTLE, ALMOST LIKE A PLASTIC RECORD PLAYER OVER AND OVER AGAIN UNTIL THE RECORDS WORE OUT. I MEAN, IT’S REALLY AN ENTIRELY NEW WORLD.>>IT IS, AND THE WORLD CONTINUES TO CHANGE.>>WE MENTIONED THAT RETAIL IS SUFFERING THROUGH A SIGNIFICANT DEGREE, BUT SHOULD OPERATORS OF THE RETAIL STORES AND SHOPPING MALLS AND THAT SORT OF THING, SHOULD THEY HAVE SEEN THIS COMING? SHOULD THEY HAVE BEEN BETTER PREPARED, OR IS THIS A CASE OF THERE WAS NOT MUCH THEY COULD HAVE DONE?>>I THINK THEY DEFINITELY — MANY OF THEM ARE SUFFERING FROM THE FACT THAT THEY PAID NO ATTENTION TO THIS. THIS TREND, JUST AS DOWNTOWN RETAILERS IN THE ’50s AND ’60s PAID NO ATTENTION TO THE EMERGENCE OF MALLS.>>MALLS, RIGHT.>>YOU CAN BLAME THE DISRUPTOR OR DISRUPTEE. TRADITIONAL LEGACY ORGANIZATIONS THAT THE INTERNET LATE, THEY ARE STILL PLAYING SORT OF A HALF GAME RATHER THAN A FULL COURT GAME, IF YOU WILL, BUT THIS IS HUMAN NATURE, YOU KNOW, THESE ORGANIZATIONS, FULL OF SMART PEOPLE, JUST ASSUME NOT CONFRONT PRESENCE OF CHANGE, BUT NOW IT’S UPON THEM.>>WE HAVE BEEN TALKING ABOUT ONLINE VERSUS BRICK AND MORTAR STORES, BUT HOW IS RETAIL OVERALL DOING? IS THE RETAIL INDUSTRY HEALTHY, THRIVING, OR IS IT STRUGGLING?>>THE RETAIL INDUSTRY IS A CIPHER FOR THE ECONOMY AT LARGE, AND SO WE’VE, LONG AGO, EMERGED FROM THIS RECESSION. THERE’S BEEN SOME SIGNIFICANT DISLOCATION WITHIN THE POPULATION AT LARGE. YOU KNOW, THE 1% GET A LOT RICHER. THE FOLKS IN THE MIDDLE CLASS CONTINUES TO STRUGGLE. THERE’S A SHIFT IN WHAT PEOPLE SPEND THEIR MONEY ON. THERE’S VIRTUALLY NO ONE BETWEEN THE AGES OF MAYBE 15 AND 75 WHO IS NOT IN POSSESSION OF A SMART PHONE. WHICH CONSUMES AN ENORMOUS AMOUNT OF TIME, ATTENTION, AND DISPOSABLE INCOME. YOUNG PEOPLE ARE FIXATED ON TECHNOLOGY AND EXPERIENCE AND THE USER, IF YOU WILL, THE SWEATER, THE SHOES, ACCESSORIES THEY ARE NOT BUYING TODAY AS THEIR PARENTS WOULD HAVE.>>YOU SAID, YOU KNOW, RETAIL IS A PROXY FOR THE OVERALL ECONOMY. DO YOU THINK THE ECONOMY IS IN PRETTY GOOD SHAPE? I MEAN, THE UNEMPLOYMENT RATE IS LOW, BUT THERE ARE MANY OTHER FACTORS THAT PLAY INTO IT. HOW GOOD A SHAPE IS THE U.S. ECONOMY IN RIGHT NOW?>>I THINK WE LOOK FINE, BUT THAT’S A CHARACTERIZATION THAT DOES NOT WORK PHENOMENON ARIAN AWFUL LOT OF PEOPLE. THERE’S TREMENDOUS INDEBTED INFLATION THAT THE GOVERNMENT DOES NOT RECOGNIZE. I MEAN, WHEN DID YOU LAST LOOK AT A REGULAR BILL YOU RECEIVE EVERY MONTH AND CELEBRATE THE FACT THAT IT DECLINED? IT DOESN’T HAPPEN. >>IT DOESN’T HAPPEN.>>EVERYTHING SEEMS TO CONSTANTLY INFLATE.>>AND YET WHEN YOU LOOK AT THE NATIONAL NUMBERS INFLATION IS ALMOST FLAT.>>THE ECONOMISTS WOULD SAY THERE’S NO INFLATION. FROM A WORKING CLASS POINT OF VIEW, THERE’S TREMENDOUS INFLATIONARY PRESSURE. EVERYTHING YOU CAN THINK OF THAT SURROUNDS YOUR LIFE IS BECOMING MORE EXPENSIVE, AND THERE’S TREMENDOUS PRESSURE ON WAGES. A LOT OF THESE RETAIL JOB DISLOCATIONS ARE CAUSING PEOPLE TO GO DOWN MARKET IN THEIR WAGES, RATHER THAN GIVE THEM A PATHWAY TO EARN MORE. THIS KIND OF DISLOCATION IS EMBEDDED IN WHAT LOOKS LIKE A ROBUST AND HEALTHY ECONOMY.>>AND WHEN YOU THINK ABOUT THE DISLOCATION, I TEND TO THINK ABOUT DEBT LEVELS, AND WE SAW IN THE GREAT RECESSION AND HOUSING FORECLOSURE CRISIS WHAT HAPPENS WHEN DEBT LEVELS GET TOO HIGH, BUBBLES OCCUR, THAT SORT OF THING. IN THE IMMEDIATE AFTERMATH OF THE RECESSION, DEBT LEVELS WENT DOWN AS AMERICANS BEGAN TO PAY OFF THEIR BILLS AND THAT SORT OF THING. IS THAT STILL THE CASE, OR ARE THEY RISING AGAIN?>>I THINK WE’RE RIGHT BACK TO OUR OLD BAD BEHAVIORS.>>UH-OH.>>FOLLOWING THE RECESSION, SAVINGS RATES INCREASED, LOTS OF PEOPLE IN THE UNITED STATES PAID DOWN OR DID NOT CONTINUE TO ADD TO THEIR DEBT BECAUSE THEY COULDN’T AFFORD IT, BUT I THINK WE’RE STARTING TO SEE THE UBIQUITOUS CREDIT OFFERS ARRIVE IN THE MAILBOX AS THEY ONCE WERE. I THINK THAT THE ECONOMISTS WOULD ACKNOWLEDGE THAT CONSUMER DEBT IS RISING ONCE AGAIN. THEN, OF COURSE, THERE’S THIS TRILLION DOLLAR STUDENT LOAN DEBT THAT HANGS AS A CLOUD OVER MILLENNIALS, IF YOU WILL, AND THERE’S A RECKONING WE’RE GOING TO HAVE TO FACE IN THAT REGARD.>>YOU WERE ACTUALLY TALKING ABOUT SORT OF, WE HAVE THIS DISCONNECT BETWEEN THE FOLKS WHO ARE IN HIGH END ASPECT OF THE ECONOMY AND THEN THE PEOPLE WHO ARE STRUGGLING, AND AT THE LOWER END, AND I OFTEN WONDER HOW LONG CAN THIS DISCONNECT CONTINUE? HOW LONG CAN THE INEQUALITY CONTINUE? INEQUALITY’S NOT A GREAT WORD, BUT THAT IS WHAT WE’RE SEEING. MY QUESTION IS, IN AN ECONOMY IN WHICH CONSUMER SPENDING IS 70% OF THE ECONOMY, BUT YOU HAVE SO MANY PEOPLE WHO ARE EITHER OUT OF WORK, NOT BEING COUNTED AS OUT OF WORK, SO THEY ARE NOT FACTORED INTO THE UNEMPLOYMENT RATE, AND SO MANY PEOPLE ARE OUT OF WORK, AND SO MANY PEOPLE ARE UNDEREMPLOYED, LOW WAGES, PART-TIME WORK, AND THAT SORT OF THING. IS THERE A DAY OF RECKONING THAT HAS TO COME AT SOME POINT BECAUSE PEOPLE DON’T HAVE ENOUGH MONEY TO SPEND, OR ARE THERE ENOUGH PEOPLE WHO ARE REALLY WEALTHY, NOT JUST THE TOP 1%, BUT THE TOP 10%, 15% WITH A TREMENDOUS AMOUNT OF MONEY, ARE THEY CAPABLE OF CARRYING THE THE ECONOMY INDEFINITELY?>>WELL, IT’S — THE TRICKLE DOWN THEORY OF ECONOMICS, THE WEALTHY, THE PROSPEROUS WILL CAUSE LOTS OF GOOD THINGS TO HAPPEN, MARKETS THROUGHOUT THE COUNTRY AND WORLD, BUT I REALLY CAN’T GET COMFORTABLE WITH THAT. I THINK AT THE END OF THE DAY, THIS COUNTRY, POST WORLD WAR II HAD AN ENORMOUS, ALMOST ENDLESS ROUND OF PROSPERITY FUELED BY THE EMERGENCE OF THE MIDDLE CLASS, CERTAINLY THE RETAIL INDUSTRY EXPLODED ON THAT BASIS. THAT MIDDLE CLASS HAS BEEN STUCK, AND IF YOU’RE OPTIMISTIC, YOU SAY, WELL, IT’LL SLOWLY IMPROVE. IF YOU ARE PESSIMISTIC, YOU SAY THE MIDDLE CLASS IS DISAPPEARING, IF YOU WILL. I’M FRIGHTENED BY THE CONTINUED PATH OF INCOME INEQUALITY THAT WE SEE YEAR OVER YEAR, AND WHAT WE HEAR FROM OUR POLITICIANS IN WASHINGTON SUGGESTS THAT’S GOING TO CONTINUE TO TAKE PLACE.>>WE HAVE ABOUT A MINUTE, MINUTE AND A HALF LEFT. WHAT DO YOU THINK WOULD HELP? WHAT DO YOU THINK MIGHT KICK START THE ECONOMY IN A WAY THAT WOULD BEGIN TO TURN THIS INEQUALITY AROUND? IS IT GOVERNMENT ACTION? IS IT SOMETHING THAT HAS TO EMERGE FROM THE CORPORATIONS? IS IT SOMETHING THAT THE PEOPLE THEMSELVES NEED TO DO? WHAT WOULD YOU LIKE TO SEE HAPPEN?>>WELL, I THINK WE’D ALL RECOGNIZE THAT INFRASTRUCTURE IS A CRISIS THROUGHOUT THE COUNTRY. YOU CAN’T GO ANYWHERE WITHOUT BEING TAKEN ABACK BY THE INFRASTRUCTURE THAT’S FALLING DOWN AROUND US, AND SO IF SOMEHOW THE GOVERNMENT AND PRIVATE INDUSTRY COULD COALESCE AROUND THE IDEA OF REBUILDING THIS COUNTRY, I THINK THAT WOULD BE OF TREMENDOUS VALUE.>>I COULDN’T AGREE MORE. WE’VE RUN OUT OF TIME. I LOVED IT. MARK COHEN, THANK YOU SO MUCH. I HOPE TO HAVE YOU BACK AGAIN.>>THANK YOU.>>OKAY. WE’LL BE BACK IN A MOMENT WITH A FINAL WORD.>>>PRESIDENT TRUMP GAVE AN INTERVIEW RECENTLY TO THE “ASSOCIATED PRESS”, AND IT WAS SO STRANGE THE “WASHINGTON POST” FELT COMPELLED TO ANNONTATE THE TRANSCRIPT POINTING OUT COMMENTS THAT WERE CONFUSING OR NONSENSICAL OR NOT TRUE AT ALL. AT THE TOP OF THE TRANSCRIPT. THE POST NOTED SOME OF TRUMP’S CLAIMS WERE ASTONISHING, INCLUDING HE MAY HAVE GIVEN THE GREATEST SPEECH EVER DELIVERED IN THE HISTORY OF THE HOUSE CHAMBER AND A DEMOCRAT TOLD HIM HE WOULD BE AMONG THE GREATEST PRESIDENTS EVER. TRUMP WAS ASKED IN THE INTERVIEW IF HE AGREED WITH THE ATTORNEY GENERAL JEFF SESSIONS THAT JULIAN ASSANGE, THE EDITOR AND CHIEF OF WIKILEAKS SHOULD BE ARRESTED. TRUMP SAID, WHEN WIKILEAKS CAME OUT, I NEVER HEARD OF IT, NEVER HEARD OF IT. IN FACT, TRUMP WAS GLEEFUL OF WIKILEAKS RELEASING INFORMATION DAMAGES TO HILLARY CLINTON. AS THE POST NOTED, TRUMP THE CANDIDATE, SAID, I LOVE WIKILEAKS. WHEN THE AP REPORTER PRESSED TRUMP IN THE INTERVIEW AND ASKED WHETHER HE SUPPORTED WHAT ASSANGE IS DOING, AND THE PRESIDENT REPLIED, I DON’T SUPPORT OR UNSUPPORT. REGARDING THE IRAN NUCLEAR DEAL, TRUMP WAS ASKED HOW ANGELA MERKEL OF GERMANY AND THERESA MAY OF GREAT BRITIAN RESPONDED WHEN HE TALKED TO THEM ABOUT THE AGREEMENT. I DON’T TALK TO THEM ABOUT IT, THE PRESIDENT REPLIED. INCREDULOUS, THE AP REPORTER SAID, YOU DON’T TALK TO THEM ABOUT THE IRAN DEAL? TRUMP SAID, I MENTIONED IT, BUT IT’S VERY PERSONAL WHEN I TALK TO THEM, YOU KNOW, IT’S CONFIDENTIAL. TRUMP BRAGED SHAMELESSLY ABOUT THE RATINGS HE GETS FROM TELEVISION NEWSCASTERS, BUT DOESN’T WATCH CNN OR MSNBC. I NEVER THOUGHT I HAD THE ABILITY TO NOT WATCH WHAT’S UNPLEASANT ABOUT ME OR PLEASANT, HE SAID. HE SAMED AMAZED AT THE NEWFOUND ABILITY. I NEVER THOUGHT I’D BE ABLE TO DO THAT, AND THEN SAID, IT’S SO EASY TO DO NOW. THAT’S AN INTERVIEW FROM THE MAN WHO IS THE PRESIDENT OF THE UNITED STATES. THAT’S ALL FOR NOW. SEE YOU NEXT TIME. ♪ [THEME MUSIC] ♪

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