Investment industry giant John Bogle tells Bill Moyers that the more money managers take control over corporations on Wall Street, the more Main Street pays the price. Bill is also joined by NPR’s Deborah Amos and The New Yorker’s George Packer who report on the Iraq War.
BILL MOYERS: Welcome to the JOURNAL.
Every week we hear of another publicly traded company being bought by a private equity firm. Some of those investment firms — like Blackstone, the Carlyle Group, and Cerebrus — have become almost as well known as the brand-name companies they’ve been snapping up, from Chrysler to Dunkin’ Donuts to Toys R Us. But private equity firms have no real interest in toys, cars, or baked goods. What they are after is big and quick returns on their capital. To get it, they buy a company and cut the wages, pensions and health benefits of the employees who work there.
Take a look at this front page story in Sunday’s NEW YORK TIMES for a glimpse of how this kind of capitalism works. Thousands of nursing homes have been bought up by private equity firms like Warburg Pincus and Carlyle. Profits were increased by reducing costs, then investors quickly resold the facilities for a big profit… leaving and I quote- “residents at those nursing homes worse off, on average, than they were under previous owners.”
Exhibit #1: Habana Health Care Center in Tampa, Florida, purchased by a group of private equity firms in 2002. “Within months, the number of clinical registered nurses at the home was half of what it had been a year earlier…budgets for nursing supplies, resident activities and other services also fell…” “When regulators visited, they found malfunctioning fire doors, unhygienic kitchens, and a resident using a leg brace that was broken…”
Basing its report on state government data, the TIMES says 15 at Habana died from what their families contend was negligent care. But when families sue, they often can’t find out even who owns the nursing homes because of the complex corporate structures private equity firms have created to cover their tracks.
It’s this kind of capitalism that drives John Bogle up the wall, as you’re about to learn. John Bogle believes owners should be in charge — and accountable. He’s known and respected world-wide as the father of index funds and the founder of The Vanguard Group, one of the largest mutual funds anywhere, with over a trillion dollars in assets.
FORTUNE magazine named him one of the four giants of the 20th century in the investment industry. TIME magazine called him one of the world’s 100 most powerful and influential people. Among his six books is this one THE BATTLE FOR THE SOUL OF CAPITALISM and more recently THE LITTLE BOOK OF COMMON SENSE INVESTING. In the current issue of DAEDALUS, the Journal of the American Academy of Arts and Sciences, he has a blockbuster of an essay on democracy in corporate America. You’ll find it on our Web site at pbs.org. I talked with John Bogle when he was in town earlier this week.
BILL MOYERS: Thanks for joining me.
JOHN BOGLE: My pleasure.
BILL MOYERS: This story in THE NEW YORK TIMES this week. What do you think when you read a story like that?
JOHN BOGLE: Well, first, it’s a national disgrace. Simply put. And there are some things that must be entrusted to government and some things that must be entrusted to private enterprise. And what we see there, at least in my judgment, is that we’ve taken medical care, healthcare and going from making it a profession in which the patient is the object of the game — preserving the patient “first do no harm” as Hippocrates would say or would have said and turn that into a business. And so, it’s a bottom line. I’ve often said we’re in a bottom line society. We’re measuring the wrong bottom line.
BILL MOYERS: What does it say to you that the real owners of the nursing home, the private investors have created this maze of smoke and mirrors that make it virtually impossible to find out who the owners really are?
JOHN BOGLE: Well, that’s so typical of much that’s going on in American finance, the way we structure these financial instruments, which are stock certificates or debt instruments. But it’s the same thing of the removal of your friendly, local neighborhood bank holding the mortgage and being able to work with you when you fall on hard times to some unnamed, often unknown, financial institution who couldn’t care less.
BILL MOYERS: These private equity firms that own these nursing homes wouldn’t even talk to THE NEW YORK TIMES. They won’t talk to reporters. I mean, there’s no accountability to the public.
JOHN BOGLE: There’s no accountability. And it’s wrong. It’s fundamentally a blight on our society.
BILL MOYERS: What does it say that big private money can operate so secretly, with so little accountability, that the people who are hurt by it, the residents in the nursing home have no recourse?
JOHN BOGLE: It says something very bad about American society. And you wonder — the first question anybody would have after reading the article — how in God’s name do they get away with that? Well, we have all these attorneys that are capable of devising complex instruments, and money managers who are capable of devising highly complex financial schemes. And there’s kind of no one to answer to the call of duty at the end of it.
BILL MOYERS: And we’re talking about some of the most powerful names in the business. I mean, these are formidable forces, right?
JOHN BOGLE: They’re formidable forces. But, I’m afraid —
BILL MOYERS: Respectable citizens, right?
JOHN BOGLE: Well, I mean, I don’t know about that. But, it’s certainly — it’s easy to say that greed is taking — playing a part — greed has a role in a capitalistic society. But, not the dominant role and —
BILL MOYERS: What should be the dominant? What is the job of capitalism?
JOHN BOGLE: Well, ultimately, the job of capitalism is to serve the consumer. Serve the citizenry. You’re allowed to make a profit for that. But, you’ve got to provide good products and services at fair prices. And that’s the long term, that’s what businesses do in the long term. The businesses that have endured in America have done that and done that successfully.
But, in the short term, there’s all these financial machinations in which people can get very rich in a very short period of time by creating highly complex financial instruments, providing services that can be cut back easily as in the hospital article, not measuring up to basically their duty.
We all know that in professions, the idea has been service to the client before service to self. That’s what a profession is. That’s what medicine was. That’s what accountancy was. That’s what attorneys used to be. That’s what trusteeship used to be inside the mutual fund industry. But, we’ve moved from that to a big capital accumulation — self interest — creating wealth for the providers of these services when the providers of these services are in fact subtracting value from society. So, it doesn’t work.
BILL MOYERS: So, the private equity nursing homes have added to their wealth. But, they’ve subtracted from society the care for people who need it.
JOHN BOGLE: That is exactly correct. Not good.
BILL MOYERS: THE WALL STREET JOURNAL editorial page celebrates what it called the animal spirits of business. And as if that’s the heart of capitalism. What do you think about that?
JOHN BOGLE: Well, I like the animal spirits of business. I mean Lord Keynes told us about animal spirits. And it comes out of a part of his work that says, “You know, all the precise numbers and the perspectives mean nothing. What determines the future of a business is its animal spirits.” You know, the desire for progress, the desire to create something new. That’s all good. But, it’s gotten misshapen. Badly —
BILL MOYERS: How so?
JOHN BOGLE: — misshapen.
BILL MOYERS: How so?
JOHN BOGLE: Well, it’s gotten misshapen because the financial side of the economy is dominating the productive side of the economy
BILL MOYERS: What do you mean?
JOHN BOGLE: Well, let me say it very simply. The rewards of the growth in our economy comes from corporate, largely – from corporations who are a very important measure, from corporations that are providing goods and services at a fair price innovating and bringing in new technology — providing a higher quality of life for our society and they make money doing it. I mean, and the returns in business in the long run are 100 percent the dividends a corporation pays and the rate at which its earnings grow.
That still exists. But, it’s been overwhelmed by a financial economy. The financial economy, which is the way you package all these ways of financing corporations, more and more complex, more and more expensive. The financial sector of our economy is the largest profit-making sector in America. Our financial services companies make more money than our energy companies — no mean profitable business in this day and age. Plus, our healthcare companies. They make almost twice as much as our technology companies, twice as much as our manufacturing companies. We’ve become a financial economy which has overwhelmed the productive economy to the detriment of investors and the detriment ultimately of our society.
BILL MOYERS: By the financial sector, you mean?
JOHN BOGLE: Banks, money managers, insurance companies, certainly annuity providers. They’re all subtracting value from the economy. They have to subtract. To be clear on this now — I don’t want to overstate it. To be clear on this, they have to subtract some value. But, the question is —
BILL MOYERS: What do you mean they subtract some value?
JOHN BOGLE: In other words, — you’ve go to pay somebody something to provide a service. It’s just gotten totally out of hand. My estimate is that the financial sector takes $560 billion a year out of society. Five hundred and sixty billion.
BILL MOYERS: Where does it go?
JOHN BOGLE: It goes into the pockets of hedge fund managers, mutual fund managers, bankers, insurance companies. Let me give you this just one little example. If you didn’t make a $129 million last year — I’m presuming that you didn’t. You don’t rank among the highest paid 25 hedge fund managers. A $129 million doesn’t get you into the upper echelon.
BILL MOYERS: And on the way here this morning, I saw a story that now a $1 billion will not get you in the FORTUNE 400. A $1 billion!
JOHN BOGLE: Well, I spend a lot of time thinking about that. I mean, you kind of asked the question, which I’ve asked in some of my work. What is enough here? And the society is out of control. I mean, in THE BATTLE FOR THE SOUL OF CAPITALISM, I talk about the frightening similarities between the American economy in America, our nation, at the beginning of the 21st century and Rome all those centuries ago around the 4th century.
BILL MOYERS: What are the comparisons?
JOHN BOGLE: We have an idea that we are the world’s value creator and leader. And I’m talking not just about economic value, but, we like to think of America as having the best values of integrity and citizenship in the world. We’re getting a little bit too much self interested. We have our own bread and circuses. And they’re a little different than the bread and circuses they had in Rome. But, we surely have our circuses whether it’s sports teams or casino gambling or the lottery in the states. And we see this not just in our economy, in our financial system. This very short-term focus on everything. You see it, sadly, in our government.
Everybody knows social security is going to run into crisis. We can’t run these federal deficits forever. But, everybody looks out two years and says, “Will I be elected two years from now or a year and a half from now?” And, the short term focus ultimately betrays the very values that we have come to be used to in this great nation of ours.
BILL MOYERS: You said the other day to someone that we think we can fight the war in Iraq without paying for it.
JOHN BOGLE: Well, we borrow the money to fight. The Iraq War by some estimates, and they’re not absurd estimates, is running now towards a $1 trillion. We could be doing what the British empire did. We could be bankrupting ourselves in the long run. And —
BILL MOYERS: You see us as an empire?
JOHN BOGLE: Well, of course it’s an empire. We reach all over the world. We thought of ourselves in many, many respects as the policemen of the world. God knows we know we’re the policemen of the Middle East. And there are those say, even from Alan Greenspan on up or down, that oil is the root of that. I mean, these are great societal questions. Protecting oil, which is in turn polluting the atmosphere.
We have problems as a society. And we don’t have to surrender to them. But, we have to have a little introspection about where we are in America today. We’ve got to think through these things. We’ve got to develop a political system that is not driven by money. I mean, these are societal problems for us that don’t have any easy answers.
But you don’t have to be an economist to know that a great deal of or a minimum in our economy is coming from borrowed money. People are spending at a higher rate than they’re earning, and we’re starting to pay a price for that now. Particularly in the mortgage side. But, eventually, that could easily spread and people won’t be able to do that anymore. You can’t keep spending money you don’t have. It gets a lot of it, you know, and it wasn’t that many years ago — maybe a couple of generations ago — that if you wanted something, you saved for it. And when you completed saving for it, you bought it. Imagine that. And that wasn’t so bad. But, now, we know that we can have the instant gratification and pay for it with interest payments, of course, over time, which is not an unfair way to do it. We’re going to pay a big price for the excessive debt we’ve accumulated in this society both in the public side and the private side.
And it’s no secret that this lack of savings in our economy — just about zero — is putting us at the mercy of foreign countries. China owns — I don’t know the exact number — but, let me say about 25 percent of our federal debt. China does. What happens when they start to buy our corporations with all those extra dollars they’ve got there? I mean, I think that’s very — these problems are long term, are very much worrisome and very much intractable.
BILL MOYERS: Your book is called THE SOUL OF CAPITALISM. Tell me what you mean by the soul of capitalism.
JOHN BOGLE: Well, I try in the book a little definition from Thomas Aquinas about the core of being — he’s talking about the human soul, of course — but, the core of being,the elements that give you meaning, the values that you have — the whole kind of wrap up of what makes a human being a human being.
And that happens in a much more, you know, a much less profound way in a corporation. There is in a good corporation and in capitalism a core of being of providing goods and services, at raising the standard living. And it’s done a very good job at that. I don’t want to demean that. You know, we went from the beginning of time, to around 1800, — the way people lived barely changed at all. And since 1800, the Industrial Revolution, and capitalism around that time has taken us to standards of living that are just — that would have been unimaginable to anybody of that day. We have all the perquisites and ease and freedom and safety of modern life. And so I salute capitalism for doing that. It’s just we’ve taken it too far. Today’s capitalists are different from yesterday’s capitalists-
BILL MOYERS: How so? What’s the big difference?
JOHN BOGLE: Well, I think much more they’re operating on their own. Instead of for the interest of whose money has been entrusted to them. It’s an element — it’s what we call a bottom-line society, again. But I think it’s the wrong bottom line. I want to come back to the difference between the financial system and the productive system. The productive system adds to the value of our economy. And, by and large, the financial system subtracts. And, yet, it’s growing and growing and growing. And this short term thing where short term orientation in which trading pieces of paper is regarded as a social value. It is not a social value. Some of it has to happen, don’t mistake me.
BILL MOYERS: Right.
JOHN BOGLE: But not as much as we have.
BILL MOYERS: What does it say to you that people seem so indifferent to the fact that one tenth of one percent of the population owns most of the wealth in this country?
JOHN BOGLE: Well, in the long run, I believe it’s unsustainable. You know, this is not going to be, you know, a country like France, say, at the time of before the French Revolution. You know, the lords of France, the kings had probably the same kind of distribution of wealth we had today come by through long generations. Their own castles. We have those castles in America now. But it says to me that, in this society, it’s not sustainable. There will be an outcry.
Even Allen Greenspan says in his book he’s worried, new book — he’s worried about this division in the society. He’s worried about dissatisfaction. He’s worried about violence in our society. You can only have so much of an advantage to those at the top of the pyramid, and so much disadvantage that’s at the bottom of the pyramid, before you start to get some very difficult things going on.
BILL MOYERS: This seems to me to be your great concern, that this self correcting faculty that is built into both democracy and capitalism is in jeopardy?
JOHN BOGLE: Actually, I think it’s fair to say it’s in jeopardy. But there’s one sense that it’s not in jeopardy. And that is, ultimately, the system will correct. The bigger the boom, I fear, the bigger the bust. In other words, you pay the price. It’s not a self sustaining system at this kind of a level.
BILL MOYERS: Do we need new rules?
JOHN BOGLE: One thing is, I believe, to have a federal standard of fiduciary duty for money managers. They’ve come from eight percent ownership of American business to 74 percent ownership of American business. It’s staggering, over unbelievable change. Without any rules as to how they’re supposed to behave. We have state laws of proven investing and fiduciary duty and things of that nature. But they don’t seem to be working. And our founding fathers actually thought about having a federal statute — a federal corporate chartering statute. I think we probably need one because if some of the states step up and say improve their governance provisions, corporations will move to another state. So the state system I don’t think can prevail.
So a federal standard of fiduciary duty which demands that our pension trustees and our mutual fund directors make sure that those pension funds and mutual funds are operated in the prime interest of those who have entrusted their money to them. And that includes responsibility for corporate governance. And it will ultimately turn to be focused more on long term investing.
When I came into this business in the 1950’s, it was a business focused on the wisdom of long term investing. We changed in that period to a business that is focused on the folly of short term speculation. And think about this for a minute. If you’re a true investor holding a company for the long term, you’re well aware that the value in that company is company’s earnings compounded over time, developing new products and services, developing efficiencies — trying to size up the proper corporate strategy, you know, making the company more valuable. But, in the folly of short term speculation, you’re just thinking will that stock be worth more or less six months from now or a year from now?
Give you a very specific example. In the first 15 years I was in this business, the average mutual fund held the average stock for seven years. Call that long term investing. Now, the average mutual fund holds the average stock for one year. That’s short term speculation. So, if you’re a speculator, you don’t care much about ownership interest. You don’t care so much about corporate governance. Why vote a proxy, for example, if you’ll not even be holding a stock in three months?
The other part of it is,and this is really makes it a very difficult problem to solve. And that is a little about of — I guess it’s Pogo — we have met the enemy and they are us. These mutual fund companies — these management companies are now owned largely by corporate America. Or international corporations — Deutsche Bank — AXA, big international companies who have bought their way into the US financial system, which is — don’t mean to demean that. But, they own these public corporations — giant public corporations like insurance companies, big banks — foreign insurance companies and banks own 41 of the 50 largest mutual fund managers.
Now, what is the job of a corporation when they buy into a mutual fund management company? It’s to earn a return on the capital they invest in that company. It’s not to earn a return on the capital of the investors who invested with that mutual fund. Now, in fairness, they want to earn as much money as they can for the fund shareholders. But, not at their own expense.
What we’ve done is have you know, what I call in the book, a pathological mutation of capitalism from that old traditional owners’ capitalism to a new form of capitalism, which is manager’s capitalism. The evidence is quite compelling that today corporations are run in a very important way to maximize the returns of its managers at the expense of its stockholders.
BILL MOYERS: Its CEOs.
JOHN BOGLE: Its CEOs, well, the upper level of five or six top officers. And they get enormous amounts of pay for actually doing very little. I’m a businessman. Listen, we all — we chief executives get an awful lot of credit that we don’t deserve. Real work in companies is done by the people who are getting themselves together and doing the hard work of making companies grow —
BILL MOYERS: And, yet, these —
JOHN BOGLE: every day.
BILL MOYERS: These are the people who most often get laid off, right?
JOHN BOGLE: They get laid off. And, of course, the ironic part of that is they often get laid off — used to be called downsizing. But, of course, in today’s America, it’s called right sizing. They get laid off. That reduces expenses. That increases earnings and that means the CEO gets more.
Just think about the country for a minute. For an agricultural economy, 95 percent, 98 percent agricultural when this country came into existence. And even by 1850, half agricultural. Now it’s about, they moved from agricultural economy, to a manufacturing economy, to a service economy. And now to a financial service economy. And the financial service economy is what troubles me. Because it’s diverting resources from the investors to the capitalists. To the entrepreneurs. To Wall Street. To the investment bankers. The hedge fund managers. To mutual fund managers. And that is a negative to our societal values.
Where agriculture and manufacturing and services, I mean, I’m perfectly willing to give a high value, for example, to art and poetry and literature. They add value to society. It may not be easy to measure it in a society that measures too much of what’s not important. And not enough of what is important. As the sign in Einstein’s office says — “There are some things that count that can’t be counted. And some things that can be counted that don’t count.”
BILL MOYERS: John Bogle, thank you for joining me.
JOHN BOGLE: My pleasure.
(NOTE: You can read the articles mentioned at this link.)
BILL MOYERS: Let’s take a look now at the clip file of stories we have been collecting on the cost and conduct of the war in Iraq. You heard John Bogle talk about how those costs could soar beyond a trillion dollars.
By one estimate, we are now spending half a million dollars on the war every minute. And now President Bush is asking Congress for another $200 billion dollars for next year. That would make 2008 the most expensive year of the war yet.
It’s not just the cost that boggles the mind; it’s the fact that no one in Washington, from the President on down, really knows where that money is going.
The government is required by law to have outside auditors review the federal books. But this month, when the Associated Press took its own look at the audits of 15 executive departments, it found that the Defense Department and the Department of Homeland Security hadn’t passed their audits and didn’t even meet basic accounting requirements. They were given “Disclaimers” – that is their fiscal records are so disorganized and inconsistent, they can’t be fully assessed. By these departments’ own admission, this makes them vulnerable to waste and fraud. For example, the Defense Department, with a $460 billion budget this fiscal year alone – is easy pickin’s for every Jesse James wannabe with an empty sack to fill.
Rep. Jim Saxton (R-NJ): There are 78 criminal investigations and 20 indictments, we’re told related to contract fraud in theater. The 20 indictments are a combination of civilian and military personnel.
Rep. John Kline (R-MN): So I am doubly appalled, triply, quadruply appalled at this day at the horrific conduct of commissioned officers, at a clear breakdown in leadership.
BILL MOYERS: Members of the House Armed Services Committee could hardly believe their ears last week when they learned that $6 billion dollars worth of military contracts are under criminal review. Another $88 billion dollars in contracts — that’s right: $88 billion dollars — are also being audited for fraud. Here are some excerpts from that hearing.
REP. CAROL SHEA-PORTER (D-NH): $6 billion here, $9 billion unaccounted for, you know, I feel sorry for you all because you are here defending the indefensible and you and I know that. But Americans are asking us how? How could this have happened? And what was the climate for this?
Shay Assad, Dept. of Defense Procurement & Acquisition Policy: We’ve not done a very good job of educating our leadership, our officers who are on the ground doing contracting, on what fraud indicators are, what they should be looking for.
Rep. Phil Gingrey (R-GA): Some of the witnesses have said that what, you know, we need more ethics training. Ethics training for a full colonel in the US army to me is like asking a Catholic bishop to re-read the Baltimore Catechism. I’m just absolutely appalled.
Rep. Ike Skelton (D-MO): Why is it that the United States military has this problem as opposed to large multinational corporations, Mr. Gimble?
Thomas Gimble, Dept. of Defense Principal Deputy Inspector General: Mr. Chairman that’s a great question. And if I could give you a really definitive answer, I’d be – I think I’d be in pretty good shape.
BILL MOYERS: There are 630 private companies under U.S. government contract in Iraq. Their employees do everything from construction to guarding diplomats. You’ve surely heard of Blackwater — it’s just one of many mercenary companies operating there.
Jeremy Scahill, Investigative Journalist: Blackwater works for the State Department, there are scores of contractors who work for the US military. The investigative journalist Jeremy Scahill wrote a best-selling book on private contractors and was asked to share his findings at a meeting of the Senate Democratic Policy Committee.
Jeremy Scahill, Investigative Journalist: I sat in a defense authorization hearing this past May and watched as representative after representative asked officials from the military and the federal government how many contractors do we have? What are they doing? How much are they being paid? What nations are they drawn from? The answers were I don’t know. I don’t know. I don’t know. I think it’s ridiculous I have representatives calling me asking me for government documents. It should be the other way around.
The Senators also heard from whistleblowers about contractor fraud. Robert Isakson, a former FBI investigator of white collar crime, went to Iraq with his disaster recovery firm. He won a subcontract with an American company called Custer Battles.
Robert Isakson: Former Contractor in Iraq: They asked me three times to assist in preparing fake invoices and leases that they could then submit to the government. The first time I told them no. The second time I told them hell no. The third time, after telling them no, I told them they were all going to prison. As a result of my continued refusals to cooperate in their fraud they pointed machine guns at us and seized our identifications.
Later I learned that this company had handed in $10 million in fake invoices for approximately $3 million dollars of work.
BILL MOYERS: Isakson sued Custer Battles for fraud and to have that $10 million restored to the United States. He won in civil court.
But a federal judge overturned the decision, ruling that the, now defunct, Coalition Provisional Authority, which hired the firm was not part of the U.S. government — so Isakson couldn’t sue them under U.S. law. He’s still fighting it.
Sen. Byron L. Dorgan (D-ND): The question of accountability is important. It appears to me from all that I know there is precious little accountability with respect to contractors in Iraq and it seems to me that leads to frightening problems.
BILL MOYERS: As Inspector General of the State Department, Howard Krongard — known as “Cookie” — was supposed to be the watchdog guarding against corruption there. But he’s a political appointee with strong partisan loyalties, and now seven people on his staff have accused him not only of failing to do his job but of actively blocking their efforts to do theirs. The reason? Quote: “To protect the State Department and the White House from political embarrassment.”
Chairman Henry Waxman of the key House Oversight Committee is asking “Cookie” to answer those allegations in person. Waxman sent the Inspector General a 14-page letter with a litany of investigations that may have been blocked. Cookie, says the Chairman, has some explaining to do.
But so does his boss, Secretary of State Condoleezza Rice. Waxman claims she is holding back documents on Blackwater as well as what the State Department knows about corruption in Iraq.
Stay tuned: Chairman Waxman has scheduled hearings on both Blackwater and corruption in the Iraqi government next week.
BILL MOYERS: We turn now to one of the most neglected consequences of the war in Iraq, the humanitarian crisis that’s been unfolding since the American invasion 4 1/2 years ago. It’s almost beyond comprehension, two million inter-refugees inside the country, a million dispossessed in Baghdad alone, their numbers rising stupendously during the surge. Another two million have fled to other countries, over 1 1/2 million to Syria, another million or so to Lebanon and to Jordan which has now closed its borders. Among the refugees are Iraqis escaping reprisals for cooperating with Americans. The Bush Administration has allowed fewer than 1,000 of them into the U.S.
This week the Senate passed the Iraqi Refugee Crisis Act, calling on the President to do more. We’re seeing a human tragedy unfold with consequences that can only compound in the months to come as the power vacuum in Iraq spreads. Joining me to talk about this is George Packer. He’s a staff writer for The New Yorker who’s acclaimed for his articles, essays and reviews on foreign affairs. In 2005 his book, The Assassin’s Gate, America in Iraq was named by the New York Times as one of the ten best of the year. This week he’s more justly proud of being the father of a brand new baby, Charlie, obviously also one of the ten best of the year. And National Public Radio’s, Deborah Amos, who’s been a colleague of mine in public broadcasting since 1977, 30 years now. Deb Amos is one of the few American journalists to cover this story. She’s just back from Syria, Lebanon and Jordan, her fifth trip to the region to report on the refugees. Welcome to you both.
DEBORAH AMOS: Thank you.
GEORGE PACKER: Thank you.
BILL MOYERS: Give me a human face to these people. Who are they?
DEBORAH AMOS: So many of them, Bill, are the doctors, the professors, the architects, the intellectuals, the poets. There are the poor who have left. But this community that’s now in Damascus and Amman and increasingly going to Lebanon is the middle class. These are the technocrats, the kind of people that you need if you want to rebuild a country. And this is the demographics that has left Baghdad.
BILL MOYERS: What is life like for them now? What — what is — we think of refugees in the Middle East as Palestinian refugees living in those awful camps. What — what do these people face?
GEORGE PACKER: As Deb says, they have these — what you might call middle class concerns. They’re not so much worried about food although I think as their savings dwindle they will. They worry about their children’s education, health care and the fact that they really can’t work and so they have – they are a desperate population but they’re not the kind of refugees we think of coming out of Darfur or Somalia. They are very much a middle class population and the great problem for them is they all left Iraq with some money and they’re running out of money, and a few of them are actually going back to Iraq because they don’t have enough to spare.
BILL MOYERS: I think I heard you report not long ago that in Damascus there’s something like 20 to 30 people, refugees, living in the same room?
DEBORAH AMOS: Many people do that. 20 people living in one apartment.
BILL MOYERS: For how long?
DEBORAH AMOS: They do it for months. And it’s not because they’re all broke. It’s because they have no idea how long they have to hold out. And when you run out of money the choices are very stark. The — the incidents of child prostitution in Damascus is rising dramatically. There’s a — there’s a belt of clubs above Damascus. And this is where some Iraqi families are prostituting their daughters. That’s how dire —
BILL MOYERS: For money?
DEBORAH AMOS: For money. That is how dire it is becoming in Damascus. Or you go home. There was a young man who was a sculptor. And he was targeted in Baghdad. He came to Damascus. He ran out of money. He went home last week and he’s dead.
BILL MOYERS: George, why didn’t the administration anticipate this?
GEORGE PACKER: I think it’s a piece — with everything that’s gone wrong with the war, for political reasons. To acknowledge that there was a huge refugee crisis in the region, to acknowledge that Iraqis who work with Americans are a uniquely endangered population in Iraq — I mean, they are as hounded and helpless as European Jews in the 1940’s — would have been to acknowledge that the war was going badly. That it was creating more pain than it was alleviating, that the picture of steady, slow progress was false. And so the administration simply chose to ignore this crisis. I mean, for the first year or two of the refugee crisis our policy was, “It’s not happening.” More recently our policy has been we’re committing some funds, rather small compared to the need. But — our real objective is to create a safe and stable Iraq to which these refugees can then return. In other words, it’s temporary. Well, it’s not temporary. When you talk to Iraqis now compared to at the beginning of the war they no longer say in six months things will get better as they used to or in a year things will get better. They now say in two decades. In other words, for an Iraqi, not really in my lifetime. It will be my children that see a better Iraq. That means they’re making decisions now about what they have to do with their families in order to ride out a 20 year horror. And that means they’re not going back to Iraq.
BILL MOYERS: What’s the political consequences of what George just described of a long migration of refugees who can not go home, who are running out of money, who are spilling over into the borders of the other countries. Taking — I assume they’re taking their warring, sectarian passions with them, are they not?
DEBORAH AMOS: The passions, not necessarily their actions. They know very well that if kidnapping and assassinations begin in Damascus or Amman that those governments will kick the entire populations out. So, a lot of it is by remote control. A family has someone threatened back in Baghdad. But I think the larger point is this, Bill. We — no refugee situation is like another. However, you can make some comparisons to the Palestinian refugee situation 50 years ago to the Afghan one more recently. And, these populations are easily recruited. It’s not that the leadership of radical movements necessarily comes from the refugee population. But it’s a great recruiting ground for children who have been out of school for — in some cases now, three years.
BILL MOYERS: Wow.
DEBORAH AMOS: And so it — people in the region are starting to understand that this population could potentially be destabilizing. As time goes on, if there is no policy to address the situation they find themselves in. And so far there hasn’t been one. Only one presidential contender in this country, Barack Obama, has even mentioned the crisis of the refugees. The others have not so far.
BILL MOYERS: In the Democratic Presidential debate on Wednesday night the leading Democrats, none of them would commit to taking American troops out of Iraq in the first terms of their administration, if they should win. That would mean American troops in Iraq until at least 2013. What — what are the political implications of that with — with this huge migration of — of refugees?
GEORGE PACKER: I think that it just says if we’re rather helpless now with 160,000, the highest number we’ve had in — over the course of the war, troops in Iraq to prevent this outflow of people, when we’re down to 50,000, we’re going to be all the more unable to check this — this — I think, potentially destabilizing flow of people around the region. We will be in Iraq to do very specific missions. We will be there for counterterrorism. We will be there to train the Iraqi army. And we will be there to protect our own forces. We will not be there to secure the population which means civil war will continue to burn, maybe even in — in, you know, a — a bloodier way than now. And Iraqis will continue to leave the country. And they certainly won’t be able to go back. So, I think we may well have American forces simply watching helplessly as Iraqis leave. Now, there have been some proposals to reconfigure our forces along the borders in — to act, in a sense, as a net to prevent refugees from leaving.
BILL MOYERS: Border patrol like along the Texas-Mexican border.
GEORGE PACKER: Something like that and also to prevent irregular forces, jihadis and others from crossing into Iraq. I have some operational questions about that. How could our brigades, scattered in the desert, really stop people from crossing. And both morally and strategically is that a position we want to be in sending refugees back into the cities or creating giant camps policed by American soldiers which also will be, as all refugee camps are, recruiting grounds for extremists.
DEBORAH AMOS: Although, it hardly matters. The Jordanian border is all but closed. And in September the Syrian government imposed a visa restriction on all Iraqis coming into the country. Up until that time, 30,000 crossed every month. Because they could — it was the last border open. Syria has had enough with 1.5 million. So now, the policy is you have to go to the Syrian embassy in Baghdad. The problem is that Syrian embassy is one of the most dangerous neighborhoods in Baghdad so you can’t go. So, that border is essentially closed.
BILL MOYERS: What are the governments you’ve been talking to — government officials you’ve been talking to in Jordan — Lebanon and Syria, what are — what are they saying about this in terms of the long run?
DEBORAH AMOS: The Syrians say, “It costs us an extra $2 billion a year.” Because they subsidize bread, gasoline, health care. And this huge Iraqi population is putting such pressure on their own social makeup. The Jordanians say it costs them an extra billion dollars a year. And the international response has been astonishingly weak. The Saudis gave — a couple of tons of dates, dates — to this population that needs schools and health care. And we have contributed some money but not nearly enough. And so both of these countries are at their wits’ end. Why is there no response to what they see — what they know is a regional crisis outside of Iraq.
GEORGE PACKER: There’s also a lot of bad history in that region between Iraqis and their neighbors. And what Iraqi refugees tell me is the idea of Arab brotherhood which the Syrian regime is based on is wearing very thin. And they don’t feel that they’re being treated at all as kinsmen or fellow Arabs or as brothers. And… so, and above all, the Iraqis who have worked with the Americans are treated as traitors. And — and so, they are increasingly unwelcome. Shiah in Jordan are absolutely not welcome. Sectarianism plays a part in this especially, I think, in Jordan. And — and so there — there’s a sense in which these Iraqis don’t really have anywhere to go that wants them.
BILL MOYERS: How do you keep — how do you distance yourself from this dilemma, this suffering? How do you come back here and be human?
DEBORAH AMOS: It’s very, very tough. And I’ve covered refugees for most of my career. And this is a different — this is a different population. Because you can’t help thinking that it could be me. You know, I’ve met journalists just like me who have the same level of education just like me. And they have been forced to take their savings. I don’t know what I would do. So, it’s not even empathy. You don’t have to imagine. It is so stark and clear to you when you talk to people who speak English as well as you do that there’s no translation problem. You get it. And I find it’s exhausting when I come home. Because I actually get to go back to work.
GEORGE PACKER: I came back from my most recent trip to Iraq in the region having spent a lot of time talking to Iraqis like these with a feeling of shame that I had never had before as a journalist including covering this war. Because it’s a war we brought to Iraq. We bear tremendous responsibility for what’s happened in that country. And our official response whether at the embassy in Baghdad or the State Department in Washington or the White House has been so paltry, so indifferent that to hear them tell their stories, very individual stories about how they got a death threat and their supervisor said, “You can take a month off. But there’s really not much more we can do for you.” It — my eyes were burning after these interviews. I’ve never quite felt that way.
BILL MOYERS: How many trips — you’ve made five just to cover the refugees recently — how many trips have you made since the war started?
DEBORAH AMOS: I had four or five a year since the war started.
BILL MOYERS: So, do you think you’ll be going back indefinitely?
DEBORAH AMOS: Well, what you see — I know — I keep saying I cover Iraq. I just don’t ever go there. But to do Lebanon, Jordan and Syria is essentially to cover Iraq. Because the issues that are roiling Iraq are the same issues that now are playing out. Everything is hooked to everything else. You know, the American standoff with Iran gets played out in Syria and in Lebanon. And so those issues will certainly keep me going back not just for the refugees but for this confrontational politics that grows out of Iraq and now has spread through the entire region. So, I will have plenty of work to do.
BILL MOYERS: So, you the United States is grafted to the Middle East for a long time to come?
GEORGE PACKER: I think so. And I don’t think our population quite understands that. Because our leaders haven’t leveled with them as has been the case throughout the war. And so I’m afraid we’re going to feel like we’re stuck there pointlessly when in fact what we need is a coherent policy that does ask what are our interests in — over the next five or ten years? How can we secure them? Basically policy questions that right now nobody’s asking on either side.
BILL MOYERS: Given what both of you have said and what you see and what you’ve been reporting, what’s the political discussion? What should Washington be talking about right now?
DEBORAH AMOS: I think they have to talk about a long term policy for these displaced Iraqis. Even with borders closed you still have in two countries bordering Iraq about ten percent of the population are now Iraqis. I mean, think about that in terms of American numbers, that, you know — I don’t know — 20 million? It’s really hard to make those comparisons. It’s huge. They will have an effect on the policies, on the social fabric of Iraq’s neighbors. None of it for the good without some sort of policy that addresses their needs — educational, health — and their desperation.
BILL MOYERS: The administration — the President invaded Iraq for many reasons, overthrow Saddam Hussein, weapons of mass destruction, al Qaeda, all of that. But arching over everything was the neo-conservative conviction that we were going to see the birth pains of democracy in the region you two cover. Are what you’re talking about the birth pains of democracy?
GEORGE PACKER: No, we’re talking about the return of real politic. This is the final, I think, defeat of the Bush Project for the Middle East. We’re talking about the only way that we can begin to secure our interests is by cutting deals with regimes that we don’t like. And I don’t just —
BILL MOYERS: Dictators in Egypt, dictators in Syria, dictators in — Saudi Arabia?
GEORGE PACKER: We’re now talking about a big arms sale to Saudi Arabia because we’re worried about Iranian influence. Saudi Arabia was the problem four years ago. We — we invaded Iraq, according to Paul Wolfowitz, in part to undercut the power of Wahabism and Saudi influence in the region. Now we’re back to James Baker’s foreign policy, which is essentially you make deals with people you don’t like in order to create stability. We’re back to hoping we can have stability because we don’t have democracy.
BILL MOYERS: Look at the places that — that are, you know, quote, in this democracy experiment, Iraq, Gaza and Lebanon. Now, the people who run the security states in Syria, Jordan, Egypt and Saudi Arabia say to their people, “That’s what you want? That’s what you want?” And they say of course no. What’s the therefore to this?
DEBORAH AMOS: And the therefore is this democratization policy has been a failure.
GEORGE PACKER: And the irony is the only country in the Middle East that has a genuine grass roots democratic and even secular movement is our number one enemy, Iran. That country has a — a movement every bit as promising as what we saw in Eastern Europe and in other countries. And — and yet we’re almost at war with Iran. And I think if we do go to war with Iran it will set that movement back 30 years. So, it seems like the therefore is countries have to find their own way to democracy. We can help. But we can’t force it.
BILL MOYERS: The drums have been beating this week for military action against Iran, beating in this country. Do you hear the same rhythm that you heard in the build up to the war in Iraq?
DEBORAH AMOS: I hear it in the region. I’ve just come back. And so I’m not as tuned to the debate here. Because I hear it as a reverberation. But I can assure you that there is a rising anxiety level in the places I’ve just come back from, Beirut, Damascus, Amman, about the possibility of a war. And it’s back. I mean, I’ve been going regularly. And it receded for a while. And I feel like people are much more anxious than they were just a few months ago.
GEORGE PACKER: What I fear is it will happen overnight. We will wake up one morning and discover that we have begun bombing targets inside Iran. And so there won’t be a chance for all of the — questions about war with Iran. What do you do afterward? You know, what — what — what do we do to protect our — our forces in Iraq and Afghanistan from Iranian reprisals? What about Israel? Those questions have to be talked about now. But unlike Iraq this could happen very quickly. And it will be too late once those questions start getting asked.
BILL MOYERS: George Packer, Deb Amos, on that — happy note — thank you very much for being with me on The Journal.
DEBORAH AMOS: Thank you.
GEORGE PACKER: Pleasure.
BILL MOYERS: A final note on the war. You may remember our report last month based on the remarkably candid op-ed piece written for the New York Times by seven of our soldiers in Iraq. Putting their careers on the line, they took issue with the optimistic rhetoric of officials in Washington on the progress of the occupation. “We are militarily superior,” they wrote, “but our successes are offset by failures elsewhere.” And they went on to describe those failures one by one. “In the end,” the soldiers said, “we need to recognize that our presence may have released Iraqis from the grip of a tyrant, but that it has also robbed them of their self-respect. They will soon realize that the best way to regain dignity is to call us what we are — an army of occupation — and force our withdrawal.”
But then the seven men pledged themselves anew to their duty: “As committed soldiers,… they wrote, “we will see this mission through.”
As they were preparing the op-ed, one of the men — Sgt. Jeremy Murphy — was shot in the head by a sniper. He is now in a rehab facility in Southern California, trying to recover from a severe traumatic brain injury.
Since then, two of the other co-authors of the piece — and five comrades — were killed when their military vehicle turned over in Baghdad.
Yance Tell Gray was 26 — and wore his sergeant stripes proudly on his sleeve, next to the Bronze Star on his chest, and the oak leaf clusters, the Army Good conduct Medal, the Humanitarian Service Medal, and the badges indicating his service as a combat infantryman, Ranger, and paratrooper. He had won just about every honor a soldier could win, for doing just about everything a solder can do.
His wife Jessica said, he was “an amazing husband and an adoring father (who) couldn’t wait to come home and be a dad to his daughter.” He didn’t make it. He was nearing the end of four tours of duty in Iraq and Afghanistan when he was killed. This week he was buried with full military honors at Arlington National Cemetery, having given all a soldier can give.
Omar Mora enlisted in the Army because he wanted to do something in response to 9/11. He made sergeant in three years, and was shipped to Iraq. A roadside bomb damaged his hearing in April and he was sent home for two weeks. He returned to combat only to have a comrade die in his arms. Sgt. Mora had just received his citizenship papers when he and Sgt. Gray were killed. His service was held at St. Mary of the Miraculous Medal Church where he had taught Sunday School. He came to America from Ecuador with his mother when he was two years old.
I’m sure many of you’ve been watching Ken Burns’ moving account this week of The War — Ken’s notable series recollecting the personal stories of the sacrifice made by an earlier generation of Americans caught up in the catclysm of the Second World War. But any war is The War for the soldiers who die in it — the war they will not live to remember, or recount for their grandchildren, or revisit in the movies. For sergeants Omar Mora and Yance Gray, who fought bravely and bravely told us the truth, The War is over. I’m Bill Moyers.
This transcript was entered on May 22, 2015.