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CNN IN THE MONEY
United Airlines Defaults on Employees' Pensions; Marijuana Arrests Up, Coke and Heroin Down, in Drug War; GE Launches Pro- Environment Campaign.
Aired May 14, 2005 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDERICKA WHITFIELD, CNN ANCHOR, IN THE MONEY: The information comes from knowledgeable sources. They tell CNN that Haitham Al Yemeni had been tracked for some time by U.S. intelligence officials. They had hoped he might lead authority to Osama Bin Laden or other top Al Qaeda leaders.
Unrest continues this week in the former Soviet Republic of Uzbekistan. Human rights monitors say hundreds of people were killed by government troops in the wake of yesterdays anti government protest in Andrezon (ph). The U.S. Embassy warns Americans in the city to stay off the streets.
Insurgents in Iraq are keeping up their deadly attacks this weekend. In the latest incident an Iraqi policeman was killed and two others were wounded, when insurgents took aim at a police convoy. Earlier, two separate bombings in the Iraqi capital killed eight people. And near the Syrian border, four more American marines were killed in the U.S.-led offensive against insurgent.
I'm Fredericka Whitfield at the CNN Center in Atlanta. More news at the bottom of the hour, IN THE MONEY begins right now.
UNIDENTIFIED MALE: From New York City America's financial capital this is IN THE MONEY.
JACK CAFFERTY, CNN ANCHOR, IN THE MONEY: Welcome to the program. I'm Jack Cafferty. Coming up on today's edition of IN THE MONEY, downgrading retirement to economy class. A bankruptcy court is letting United Airlines walk on billions of dollars in pension obligation. We'll look at how safe your retirement arrangements are.
Also head, weed whackers. A new study found arrest for marijuana is up, Andy, while busts for coke and heroin are down. See if the fight against drugs is targeting the right people.
And GE's green, green cash. The company's just launched a new pro environment campaign. We'll ask green activist Robert F. Kennedy Jr. What it takes to make big business change its way.
Joining me today are a couple of ION THE MONEY veterans, CNN correspondent Susan Lisovicz and "Fortune" magazine editor at large Andy Serwer.
Secretary of Defense Donald Rumsfeld out with a big announcement this week that the government can save something in the neighborhood of $50 billion by closing obsolete or outdated or outdated or empty military bases around the world. Now goes to a commission, I guess, that will decide which bases get closed. Somebody pointed out if they close all the ones on Mr. Rumsfeld's listings they could fund the war in Iraq for about 180 days.
ANDY SERWER, CNN ANCHOR, IN THE MONEY: Well, still, the timing kind of rang a little hollow or didn't sound so sweet to a lot of critics. Because we're at war, obviously. So many of these bases were built during World War II or even before that. World War II of course we were at total war for half a decade, we needed this. Since then, we've been closing them at various points. In the '70s in particular, not in the 80s we had a military build-up then, and then in the '90s again. So a lot of them of course are obsolete, but is now the right time?
SUSAN LISOVICZ, CNN ANCHOR, IN THE MONEY: Yes, and let's just emphasize, we are at war. And people elected George Bush, one of the reasons, were to feel good about the security. We are talking about you said $50 billion, 29,000 jobs -- 29,000 jobs. So if we thought that the confirmation hearings for John Bolton was nasty and you see the squabbling, wait until this happens.
CAFFERTY: Well history every time we get in one of these base closing mode, we name a commission, give them the list and then have hearings and the Senator Foghorn finds out, oh, they'll close the base in my state, not on your life. Inevitably, the list of 200 bases becomes a list of 20, the times table goes from five years to 40 years, the saving -- the last round of this they saved a total of $18 billion over how ever many years it took to close down the bases. The cost of closing them down, $22 billion. So --
SERWER: And of course the president wants to put oil refinery on these bases, too, so remember that plan. So maybe that will figure into it.
CAFFERTY: On to other things, troubling news from a troubled airline. A U.S. bankruptcy judge has ruled that United Airlines can walk away on four under funded pension plans, billions of dollars and shift responsibility for those plans to the federal government. This will be the largest default in U.S. corporate history. The plans cover 120,000 United workers and retirees and are under funded by nearly $10 billion.
Now, if they can whittle down the pension of a hard-working UAL pilot, you got to wonder whether anybody's pension is really safe these days. In fact the whole retirement picture just isn't looking too reliable as we sit here and talk.
What's in your 401k might not go far enough for your golden years. We don't want to get started on the Social Security debate. Jack Otter is going to help us figure out what United's move means for the rest of us pension holders and the rest of the United States. He is the article's editor at "Smart Money" magazine. Jack nice to have you with us.
JACK OTTER, EDITOR, "SMART MONEY:" Great to be here. CAFFERTY: What are the implications of this judge in allowing UAL to simply walk on all these pension obligations? Yes you don't have to worry about it hand it off to the federal government.
OTTER: Yes that means hand it off to you and me and that's scary. I think UAL is the canary in the coalmine. It was a sick canary already and so that's why it's going first. The other legacy airlines are probably going to try to follow suit and then who knows who comes after that, GM, auto parts suppliers. It's very scary for people who are relying on a pension for their retirement years.
LISOVICZ: Jack can we just do a little 411 on the PBGC, this federal program that is going to take over UAL's pension programs? From what I understand, about two-thirds of it will be paid out. But tell us a little bit about this. I mean this is, certainly, the place of last resort that anyone would want to go. How much does it have in its coffers? How long has it been around? What's its history?
OTTER: It doesn't have nearly enough in its coffers. It's an insurance agency, funded by the federal government -- or actually, funded through premiums that these corporations with pensions pay. The problem is that premiums aren't nearly enough to cover the actual cost of the insurance. So if enough companies follow suit -- I mean, there already isn't enough in the kiddy to cover the obligations, but there's something like $450 billion of under funded pensions in the U.S. It doesn't mean they're going out of business.
They won't -- that they'll actually have to file for bankruptcy, but they're sitting there in an under funded state where they may have to ask the federal government to step in. Now, what happens in a case like UAL is any pensioner who would expect less than $45,600 a year won't really see much of a difference. The change is the feds will be paying it instead of UAL. If you're expecting more than that, though, you're out of luck. That's the maximum this agency pays out.
SERWER: Jack, I'm interested in talking a little bit about what exactly a pension is. You know, when you get a job, they say, here's your salary, $50,000 a year, and we have this tremendous benefits package and here's your pension. But it's not really a contract. You know, typically, employers don't cut salaries, although that happens sometimes. It is certainly within their right to get rid of these pensions. It's a horrible thing. I mean they lay people off; they can cut your pensions. What should you think when someone tells you, here's your pension?
OTTER: Well I just don't think you ought to rely on it completely. People at first prefer a pension to, say, and a 401(k) because a pension if it works correctly, is like an annuity. For as long as you live, you're going to get this payout. It will go up with inflation, it sounds great. But as you point out, it's actually not a rock solid obligation, the company goes under, and so does your pension. 401(k) of course is going -- you'll have to contribute to it every year.
The nice thing is, it's going to be there. If you want to take a conservative course, you can throw it all in a money market fund. I don't advice that, but the point is you can essentially put money in the bank every year. It's your money no matter what happens, it's not the company's money. So there's certain advantages to saving on your own and that's clearly the lesson at the bottom of this, is people cannot rely on pensions they're going to have to save on their own for retirement.
CAFFERTY: What country are we in here? We can't rely on pension, we can't rely on Social Security, you know, what -- what's going on? I mean it used to be you go to college or you go to school, you come out go to work for General Motors some big corporation, you spend a career there, you spend a life there. The companies were paternalistic. They looked after health care, they looked after retirement, and they cared about the towns in which they had their plant and factories. It's all gone now, isn't it?
OTTER: Absolutely. GM is a great example. Frankly, I think GM was a little bit too paternalistic. I mean the numbers at GM are extraordinary. They spend twice as much on health care benefits for retirees than they do on steel to make cars. A lot of people point out that GM has become an HMO and that's exactly right. So again if they had not been so generous people wouldn't be stuck with this fear, suddenly. "Geez, I didn't save for retirement now UAL is going under what am I going to do?"
LISOVICZ: You know Jack people who are in the defined contributions, the 401(k) s, shouldn't rest easy either. Because what you've observed is that there's an increasing amount of fraud. You have to be vigilant whether you're in a pension plan, the defined benefit plan, or in the 401(k), the contribution plan, is that correct?
OTTER: Sure but I don't want to get people too upset about this issue of fraud. I mean this is a very small-scale -- I think -- my guess is what's happening here is that these companies are putting money in, say, mutual funds you've never heard of and for some reason "Morningstar" doesn't list. I mean do your homework if your company is, say, using Fidelity or any of other big guys for their 401(k) plan and you're investing in Fidelity Magellan, not a great fund but we know it's there, you've got nothing to worry about. This is a very small, very small segment of the 401(k) population but everyone should be vigilant of course. Find out where is that money really? Is my company really making those contributions every month?
CAFFERTY: Jack, we are going to leave it there. Thanks for your input. I feel better there at the end. Jack Otter, the article's editor at "Smart Money" magazine. Thanks for being with us.
CAFFERTY: When we come back on IN THE MONEY, cutting the grass. New figures show marijuana arrests are way up while they're down for cocaine and heroin. Find out if law enforcement is putting the focus where it's needed most.
Find the stock playing your kid those Japanese language tapes. See why cramming a kid full of knowledge doesn't necessarily make him a better student when he gets to school.
And giving a jolt to General Electric. Robert F. Kennedy Jr.'s been fighting that company over pollution for years. We'll see if GE's new green agenda goes far enough for him. Stick around.
CAFFERTY: Well if you think the war on drugs is being fought in city crack dens or makeshift crystal meth-labs out there in Middle America, you're only about half right. A recent report suggests 45 percent of all drug arrests are marijuana-related, and that is up 28 percent -- from 28 percent a little more than a decade ago. Why the new focus on grass? Let's find out from Peter Reuter who's a professor of public policy and criminology at the University of Maryland. Professor, nice to have you with us.
PETER REUTER, PROFESSOR, UNIVERSITY OF MARYLAND: Thank you very much.
CAFFERTY: Is this a conscious decision on the part of drug enforcement people to target marijuana over things like cocaine, heroin and other harder drugs?
REUTER: I've not found any evidence for that. It's really quite surprising. You've seen this change throughout the country, more in some cities than others, but really in most of the country. And nobody ever sort of declared there was a war on marijuana. It's not as though marijuana use has sort of gone up in this country. There's talk about increased use amongst adolescents and that did go up in the mid 90's. But really for the country as a whole marijuana us has been stable for about 15 years now. So it's really quite a puzzle for why this happened.
SERWER: All right so you're not sure why it is --
SERWER: I think most people now, you know, it's different from the '60s when you had a generation of people who never tried marijuana. Now we're all grown up, people have experimented with marijuana they know it's not dangerous, they know it's not a big deal. Many members of the administration have smoked marijuana --
SERWER: Why, why is this happening then? I mean --
REUTER: Right. No, it's a fair question. One theory is just it's sort of part of the quality of life policing movement that led to police sort of going after small infractions because that's a why of catching people that are going to sort of do things that will create greater problems. But I actually -- I don't find it very plausible for marijuana. If you look at who gets arrested for marijuana, it's particularly amongst young people. Big increases are amongst people under the age of 18. And it's very hard to see that that has been focused on, on kids who are sort of particularly sort of risky to the population -- you know, to the public generally.
LISOVICZ: You know Professor, I mean there's a wide -- a wide swath of the population that thinks pot smoking is relatively benign. Would you see this as almost an encouraging sign that federal authorities are cracking down on marijuana, as opposed to the fact that maybe fewer people are doing crack?
REUTER: Well, it is true that actually -- crack and heroin and cocaine have all been declining slowly but steadily over 10 or 15 years, met amphetamine's been going up, but still a substantially smaller problem nationally than the others. If you want to be optimistic, sort of take solace from this, you could argue that yes, it's a sign that other drugs aren't getting worse. It's not a great defense for arresting 700,000 people last year for basically possession of small amounts of marijuana for personal use.
CAFFERTY: You wrote, or co-authored something called an analytic assessment of U.S. drug policy. We've been fighting this war on drugs for a very long time at a very large cost, with very mixed results.
CAFFERTY: We have U.S. armed forces on the ground in Afghanistan, walking around the poppy field, where the bulk of the world's opium is grown. We have working knowledge of all of the cocaine operations in South America. And the critic of U.S. drug policy say if you want to get it off streets in this country it could be done, we just simply choose not to do it and yet we continue to throw tens of billions of dollars every year at this so-called war on drugs. Give me your take on that idea if you would.
REUTER: Sure, Afghanistan accounts for at least 70 percent, probably more, of the opium in this world. You're right, it's easy to identify where it's grown. They're not trying to hide it much. It's certainly technically possible to spray it. If you care about the stability of the government of President Karzai, spraying poppies is one way of really putting the whole Afghan Democratic enterprise at risk. This is the principal source of earnings for very large numbers of farmer out there. Their impoverished, they are not growing rich growing poppies.
They're a little less poor than they would otherwise be. But if you start spraying it, then the stability of that government gets threatened. And we care about the drug problem in this country. We care even more about maintaining a stable Democratic government in Afghanistan and that's a real tension. It's more complicated in Columbia. Again, you've got some of the same tension. After the cocoa fields, you will increase political resistance to a government that is not in great shape, in which the U.S. cares about. There it's actually so technically more complicated and the U.S. does a lot of spraying. It is -- Columbia still produces a great deal and if the U.S. is aggression and successful there, it can really move to Peru and Bolivia. There's been a lot of movement over time around the Andes.
SERWER: You know Peter just to follow up on your answer to Susan's question. What you're suggesting is the drug enforcement police efforts in this country, because there's less heroin and cocaine, they're concentrating their efforts on marijuana, which is not a very comforting thought. Let me ask you something. There have been incremental moves towards legalizing marijuana in this country, medical use -- do you ever think we'll see marijuana legalized?
REUTER: There's no great popular support for any, really, major change. I mean, the medical marijuana is I really think, a sort of -- sort of almost diversionary matter. The question of whether marijuana is medicine is sort of -- almost a factual question. The government has been unenthusiastic about supporting it. Supporting research about marijuana. So the sort of folk war has arisen and that gives popular support to the notion that marijuana should be available for certain purposes. But if you look at the opinion polls about changing the laws even with respect to removing criminal penalties for possession of small amounts of marijuana, there's no great support.
LISOVICZ: But Professor, do you favor it?
REUTER: Yes, I do. I can give a complicated answer, but if you put it to the short version, yes, I do favor that.
SERWER: Interesting, interesting perspective. Peter Reuter, professor of public policy and criminology at the University of Maryland, co-author of "Analytic Assessment of U.S. Drug Policy." Thank you for coming on the program
REUTER: Thank you.
SERWER: Coming up after the break, web weaver. Cisco is out with its new quarterly numbers this week; we'll look at how the results affected shares in the networking company.
Plus finally an excuse to quit moving your lips when you read. If you think reading to your kids will make them better student, we've got a surprise for you.
And calling in sick. With "Star Wars" fever. The first films in the series took a whack out of office productivity. We'll take a look at the next one.
SERWER: Cisco Systems helped ease some fears about the tech sector this week with a solid earnings report. But the company that makes the technology that keeps the Internet running is still cautious about the future. At the same time, Cisco is looking into pioneering a new way to dispense stock options in a more upfront way.
Cisco shares are trading near their year low and down about 15 percent over the past 12 months. That makes Cisco Systems our stock of the week. And you know of course Cisco was one of the banner stocks of the tech bubble, of the tech boom. In fact, at one point, around the year 2000, it was the most valuable company in the world. Had the biggest market capitalization, bigger than Ge, bigger than anybody. It will be a long time before the stock ever gets up to those heights again. CAFFERTY: The stock never goes up. Cisco stock never goes up.
SERWER: It just flat lines forever.
CAFFERTY: It just went down and never goes up. They had a good earning report but then they issue a little cautionary tale -- that stock can't get out of --
SERWER: Well that's because it was so expensive back then. Probably had a P/E of 7 zillion.
CAFFERTY: That's a lot.
SERWER: So now it just has a P/E of about 26 or 20. It still is an expensive stock. It still has great growth prospect. But that was mania back then.
LISOVICZ: Yes and let's face it, in terms of the option, that's how a lot of the people in Silicon Valley became millionaires overnight. And so it's interesting. I don't quite understand it yet. Maybe Cisco just hasn't been forth coming about this vehicle for pricing stock options, but we all know that tech companies were reluctant to --
CAFFERTY: Well --
LISOVICZ: Yes, to add them to their expenses.
CAFFERTY: Because it would cause those lofty share prices to come down a little, much more transparent look at the --
LISOVICZ: Some of them have been eliminating stock options as an incentive now.
SERWER: And John Chambers, the CEO of Cisco, was adamant, and up front about fighting expensive stock options. A lot of people in the markets thought he was a very bad guy for doing that. Because it really is little bit of smoke and mirrors. Because to say that a stock option doesn't have a cost, then why would an employee want it?
CAFFERTY: Of course.
SERWER: I mean think about it turn it on its head. There is a cost to it, you saw Bill Gates bite the bullet and do it. Other companies now have to do it. He's fighting it to the bitter end is one way to look at that, I think.
CAFFERTY: All right.
SERWER: One other thing to talk about just very quickly with them is that they are big in this voiceover Internet protocol. Internet telephones are something that could be really big for Cisco --
CAFFERTY: Might move the stock forward.
LISOVICZ: You sound hopeful, Jack.
CAFFERTY: Hope springs eternal.
SERWER: All right coming up on IN THE MONEY high art for the short pants crowd. If you think taking your kids to museums will make them better students you better think twice. We'll hear from an economist who says he knows what really counts.
Also ahead, new ways, GE has faced years of criticism over pollution in New York's Hudson River. We'll look at whether there's a sea change this week.
And no, you can't accessorize a business suit with a light saber. Find out whether you're a "Star Wars" geek on our fun site of the week.
FREDERICKA WHITFIELD, CNN ANCHOR, IN THE MONEY: Hello, I'm Fredericka Whitfield at the CNN Center in Atlanta. Here are our top stories.
A pair sources tell CNN that a key Al Qaeda operation -- operative, rather, was killed in a CIA missile attack. The attack was launched by a CIA operated predator drone. Those sources say the operative was killed in Pakistan, but a Pakistani official says it did not happen in that country.
Violence continues in Iraq this weekend. At least nine people, several of them police officers died in three separate incidents. Iraq has extended a state of emergency in the country for 30 days.
In western Iraq, U.S. officials say they've completed the anti- insurgent "operation matador." The effort targeted insurgent forces near the Iraq/Syrian border. Earlier the U.S. military confirmed the death of four more marines in the operation, killed when their amphibious assault vehicle hit a land mine.
I will have all the top stories at the top of the hour. Now back to more of IN THE MONEY.
LISOVICZ: If you think a helping of Mozart at dinner or Shakespeare at bedtime will put your kid on the fast track to Harvard guess again. All this culture cramming does not influence a child's development, at least not according to our next guest. Stephen Dubner is coauthor of the new book, "Freakonomiacs." Welcome.
STEPHEN DUBNER, CO-AUTHOR, "FREAKONOMICS:" Hi.
LISOVICZ: You know I'm for one am relieved because I was not playing the violins by the time I was 3, I was not speaking two languages by the time I was 4, I wasn't -- SERWER: Look where you ended up.
LISOVICZ: Working weekends.
SERWER: Yes right.
LISOVICZ: I mean beside the obvious, food, shelter, love, what really matters in a child's development?
DUBNER: Well you know really the basis of the study -- this was a department of education study. What we try to do in "Freakonomics" is take real data and try to make sense of it, and have it tell story not quite what you want it say and not what you think it might say, but what it actually says about what's going on. It turns out what really matters most are kind of who you are as a parent and not what you do.
So if you are -- if you've taken the time to get some education yourself and to build a career yourself and if you've built a family where education is considered an important thing and you kind of set that example you're probably -- your kids are probably going to do pretty well. All the culture-cramming, though -- on the other hand, on the other end of things, TV-watching doesn't seem to turn a kid's brain into mush either. So there's a lot of surprising stuff in the data.
SERWER: Wow, I mean, listen Stephen, I am the father of two elementary-aged kids and, boy, this fight with the TV and IMing on the Internet and all that, I just forget it, I just turn on the TV and let them go.
DUBNER: Just give them a beanbag chair and TV and they're fine.
SERWER: Don't tempt me.
DUBNER: We don't mean to say that, you know, you should let your kids do what they want when they want and so on. There's just a lot you can learn from looking at the data. All we're talking about is how these different factors affect child -- children's early school performance. We're not talking about, like the character of a child. It may be if you like to bring your kids to the museum you know twice a week, twice a month what ever and you like to play baby Mozart in the womb and you like that and that's part of your culture and whom you are, that's great. The point is that parents should love their kids, they should encourage their kids but they shouldn't drive their kid crazy or themselves by thinking that culture cramming is the answer to making smart kids.
CAFFERTY: Where did this idea come from? New York City has taken it to an absolute illogical extreme. I mean we have got people here on staff here at CNN, they are all over the city who race to get their 3- year-old to the best preschool which cost $20,000 a year so they can immediately start translating from the eloign (ph) from Greek to Chinese. It's absurd. And it's not real. The parents of these kids don't live that way. We're talking about a genuineness of who the human being that's raising the child really is. How did we get on this track of culture cramming for want of a better word?
DUBNER: Well, I think that -- you know, what we would call it in "Freanonimics" is kind of two things. One is obsessive parenting and the other is competitive parenting. I think we all see all the time. I'm as guilty of it as anybody. My partner, Steve Web, my writing partner in "Freakonomics" who is an actual economist, he's been looking that the data for a long time. He's smart about it. He now knows and started to convince me. On the other hand, I'm not going to stop doing what I love to do with my kids.
But let me give you a for instance, you take two statistically equivalent children and one of them has 100 kids books in the home and the other has zero. The kid with a whole lot of kid books tends to do better in school than the one with zero books. So we think that makes sense because the kid is being read to by his parents. But then you take two kids, both of whom have a lot of books but one never gets read to by the parents and the other all the time. The one that doesn't get read to doesn't seem to suffer. I say, are these books performing some kind of magic osmosis on the brain? What's going on? Here is the thing those books are not a cause of the intelligence they're an indicator. They indicate that the kinds of parents who have a lot of books in the home probably are smart parents to begin with. They probably got a lot of education themselves to begin with.
LISOVICZ: So you're basically saying you don't have to play the Mozart in utero, right? Basically it's in the DNA, two smart people may well produce a smart child?
DUBNER: Well, that's a lot of truth in that, certainly. As anyone who has ever studied genetic and IQ certainly knows that. I don't think any of us are comfortable saying that's the whole picture. We certainly don't say that either. The point is that the smaller pieces that a lot of modern parents are trying to do -- here's the thing. There's a big privilege gap for sure between well-educated high-income parents and poorly educated lower-income parents. And that gap is real and that shows up in the data.
There's another gap that's really imagined. That's what we're saying. If you're a pretty well set family, you know, you've got some education, got a good solid home and so on, to think that you're going to shove the kid up into the upper echelons by doing these, you know, smaller things that seem to make a big difference, you're probably mistaken.
On the other extreme, spanking is something we might consider an unenlightened thing and if a parent does spanking, that will reflect on the kid's scores, too the study shows that's also not the case. It is really kind of about the environment, the family, the education, and kind of the desire, much less than the actual -- the bottom line is parenting technique seems to be highly overrated when it comes to childhood test scores.
SERWER: I asked the pre K a couple years ago, and I asked this kid's mother whether the little girl wants to have a play date with my daughter and she said no, she has to go to German lessons. I thought that was hysterical. So it is about value and hereditary, is that it? DUBNER: Values and hereditary. Heredity is certainly a big part it, values I would say is a good word for it. I think that's really it's about accepting the fact that a lot of our outcomes in life are determined by things that have -- are not so obvious. So to think that, like, if I play the baby Mozart while the baby is in utero, that's going to somehow flip a switch in the brain that will shoot the reading and math scores through the roof, that's not the case. You have to think a little bit more complicated, a little bit more long term. The good news is by the time most parents pick up a parenting book, it's too late. Most of what you need to do you've already done and you are a good parent in all likelihood.
LISOVICZ: And that gives confirmation to my parents, they taught me by example and let they me watch a fair amount of TV.
SERWER: Look where you ended up.
LISOVICZ: With Jack and Andy, I've made it. Stephen Dubner co- author of "Freakonomics." Thank you for joining us.
DUBNER: Thank you.
LISOVICZ: There's much more to come on IN THE MONEY. Up next, small world, big money. Find out what makes a corporation decide to care about the planet as well as the bottom line. We'll speak with environmental campaigner Robert F. Kennedy Jr.
And the mysterious illness that makes you sit in a dark room and look at spaceships. See how many workers are expected to call in sick, quote/unquote, when the new "Star Wars" movie comes out.
SERWER: Even though the Bush administration has not been pushing a green agenda, environmentalists say Corporate America is beginning to come over to their side. Banking giant J.P. Morgan recently said it will restrict lending practices to projects that will contribute to global warming. And this week, CEO Jeffrey Immelt took the lead, announcing his company, GE, will double its research budget for energy and environmental technologies to $1.5 billion.
So why have some companies decided to go green? Is it about doing the right thing, profits, or pr? Joining us to talk more about this is Robert F. Kennedy Jr., who's dedicated much of his legal career to protecting his environment. He's a senior attorney at the Natural Resources Defense Counsel and a founder of the Stopglobalwarming.org. Welcome.
ROBERT F. KENNEDY JR, ATTORNEY, NATURAL RESOURCES DEFENSE COUNSEL: Thanks for having me.
SERWER: Yes, let me ask you, Robert, I mean you've been very critical of GE over the years. And I'm just wondering if you think they've gotten religion to an extent now.
KENNEDY: I think Jeffrey Immelt, like many CEOs today, is recognizing what we've long recognized, which is good environmental policy is 100 percent of the time is identical to good economic policy if we want to measure our economy and this is how we ought to be measuring it, based upon how it produces jobs and the dignity of jobs over the generations and how it preserves the value of the asset of our community. If the only way of doing things was to say, let's treat the planet as if it were a business and liquidation. Let's convert our natural resource to cash as quickly as possible and have a few years pollution-based prosperity, and you can do that, you can generate an instantaneous cash flow, but our children are going to pay for our joy ride.
The problem is that there's a lot of money to be made in pollution and pollution is a way of stealing resources that belong to other people, stealing the common, sort of privatizing the commons. What government need to do is to incentives good behavior in the marketplace and I think that's what Mr. Immelt and many of these other companies recognize that no matter what the Bush administration does, that those rules are coming down the road and the companies that survive in the marketplace are going to be the companies that are prepared to take advantage of those new rules.
LISOVICZ: Robert, so the government thing is one whole separate issue. But just with GE, the fact that GE says it's going to use its technology, it's going to be introducing new products every year, the fact that GE makes everything from jet engines to light bulbs, the fact that it's the most highly valued public company in the world. Would you say that they -- a threshold has been reached at this point, that truly, despite your battles with GE and the Hudson River, that this is a good step?
KENNEDY: This is definitely a good step. And Mr. Immelt should be commended for it. It's something that's caused a lot of excitement in the environmental community. We've seen other large corporations take this same kind of stand publicly, BP, the British Petroleum producer actually changed its name from BP to Beyond Petroleum a couple years ago and has been saying all the right things and I think General Electric, this goes beyond rhetoric. Mr. Immelt is making a commitment for his company producing green technology because he sees that as a good economic choice for the company. It's not philanthropy; it's a good economic choice.
CAFFERTY: You the signs of global warming are just becoming too numerous to ignore anymore. The polar ice caps are melting. Certain species of wildlife being adversely affected. The hydrocarbons in the air are taking their toll. Are we to late to get to this game? Are we on a slippery slope from which we eventually will not recover? Or can this thing be turned around? It seems like such a massive undertaking.
KENNEDY: Well, we're going to have some global warming, but the -- you know, the projections -- there's a wide range of projections. And if the -- at the wider range at the most destructive range, it's really catastrophic. It's the apocalypse. At the least destructive, it's something we can live with. And that's what I think, you know, our governments and the governments of all the world have to start recognizing, we have a responsibility in this generation to take -- start taking real steps and to encourage our industries to take real steps.
And, you know this is free market capitalism. The environmental groups want the free market to work. But pollution is a subsidy. When you show me a polluter, I'll show you a fat cat, using political clout to escape the discipline of the free market and shift his cost to somebody else. That's what all pollution is. It's a way of corporations trying to shift their cost to somebody -- to people outside of their corporations. And what we need are rules that require actors in the marketplace to pay the true cost of bringing their product to market. That's all the environmental laws are meant to do. They're really meant to restore free market capitalism in America.
SERWER: Robert, let me just ask you quickly, you mentioned BP. Is there really a difference between BP, supposed to be a green oil company, and Exxon, which is supposed to not be one?
KENNEDY: There's a huge difference. You'll see this one every industry. You know, BP is genuinely -- and you no this isn't saying that BP doesn't have problems because anybody who produces that much oil or any kind of energy is going to impose some kind of environmental cause. But if you look at the institutional culture within the company, you know, Exxon is out there, still, funding think tanks in Washington, these phony scientists -- we call them biaustitutes who stand up there and say there's no such thing as global warming and all this kind of nonsense. That's where their pr is going.
That's what the attitude of the company is, is that we are going to deny this, just like the tobacco companies did about cigarettes, rather than saying -- which is what Synergy, the big coal company, you know, and utility company, and what BP have done, is said, look, we are producing a commodity that is critical to the world economy but it is causing huge problem, catastrophic problems in long run, and what we need to do is figure out ways to burn energy and to provide and to generate a prosperous economy, but at the same time, to reduce our impacts. And I think that's where the environmental community wants to see the business community go. What we need is the business community demanding standards from government. Because if you have good actors in the marketplace like BP, they're going to penalized when there's Exxons out there that racing to bottom, that are dragging down -- you know that take the low-hanging fruit, that are dragging everybody down. It penalizes the good actors, if you allow bad actors to compete against them in the marketplace, using bad practices that lower their costs when the good guy is trying to do the right thing.
LISOVICZ: Robert F. Kennedy Jr., founder of Stopglobalwarming.org, senior attorney with the National Resources Defense Counsel, thanks for joining us.
KENNEDY: Thanks for having me.
LISOVICZ: Up next on IN THE MONEY. May the force be a little less with you? Find out if your fascination with "Star Wars" is getting out hand on our fun site of the week.
And if you can still type while you're wearing the wookie costume, drop us an e-mail. The address is INTHEMONEY@cnn.com.
CAFFERTY: The final installment of the "Star Wars" movie saga is coming out in the middle of this coming week. And I am so excited. That has lots of experts believing lots Americans will ditch work to go see this thing. Our web master Allen Wastler has more on that and a "Star Wars" fun site of the week. I guess when the first editions of this thing came out, productivity measurably in this country declined. Didn't it?
ALLEN WASTLER, MONEY.COM: Well yes in the latest trilogy, when you look at what happened with the first episode and the second episode, yes you saw a little dip. Of course our favorites, Challenger, Gray & Christmas, they always run the numbers on each event. They do it sort of tongue in cheek a little bit. They figure this one may cost the country $620 million. That's estimating they'll get close to 10 million people going in the first two days the movie's available, Thursday and Friday. Half of those are working people. They came up with that number figuring OK, the average working person makes $130 a day. So, you know, you can argue with that number a lot. Up and down, sideways. And I did a little polling around on the Internet just to see what the buzz was like. There's already a line up the street, ready to go, you know? And still a few days away. They've got their own Website dedicated to it. You're seeing that fanatic buzz --
SERWER: All the "Star Wars" nerds are productive to begin with, because the average --
WASTLER: Hey, can you survive without e-mail and tech support?
SERWER: Say no more. Say no more. My bad, my bad.
WASTLER: I've talked to some fans, though, that said they've been burn by George Lucas twice now. While they'll go and see the move they are not going to do the opening craziness, get dressed up and all that.
SERWER: What was that character that no one liked in the last one?
WASTLER: Jar Jar Binks.
SERWER: Jar Jar Binks, yes.
WASTLER: And the Website's dedicated to his death.
SERWER: Jar Jar Binks.
LISOVICZ: Get a life! Get a life.
WASTLER: Figure, you know, this -- Hollywood needs a hit and they're hoping this will be the hit. Because the movie receipts have been down this year, and they need it to go up. And the franchise, get this, the franchise for all its silliness, over $12 billion it's produced. CAFFERTY: I have never seen a "Star Wars" movie.
SERWER: Why are we not surprised by that?
WASTLER: Jack, we can help you out with that.
SERWER: Kind of looks like a wookie, doesn't he?
CAFFERTY: I made it to 62 and I'm doing OK.
SERWER: He looks like a wookie?
CAFFERTY: Fun site of the week?
WASTLER: Fun site "Star Wars"-related, OK? You know you're a "Star Wars" geek when --
WASTLER: Let's check this out -- you pass out while trying to move a pencil across desk with the force. You often get your head stuck in a bucket pretending you're Darth Vader. You listen for Obi- Wan's guidance while attempting to parallel park. Those and many more, cute little Website.
SERWER: Do you get those jokes?
CAFFERTY: Yes, I get the last one. Because I have four teenaged daughters who have learned how to parallel park without -- and the results have been mixed.
Coming up next on IN THE MONEY, thanks Allen. A time to hear from you as we read some of your e-mails from the past week. You can send us an email right now if you are so inclined, we are at INTHEMONEY@cnn.com. Back after this.
CAFFERTY: It's time now to read your answers to our question of the week, about whether you have a contingency plan should you get laid off in the coming months.
One viewer wrote this, " The best contingency plan is to stop working for a company as soon as you can. I'm ready to be self- employed and so should all of your viewer because American companies see their employees as replaceable components."
Dave wrote, "I've been living my contingency plan for the last seven years but it's not working out so well. Since I was forced into early retirement, we've had Enron, 9/11, and now gas prices through the roof. I thought I was bulletproof but I may have to try to find work again.
And Charlie wrote this, "I'm sure most Americans are like me and have no plan to survive if they suddenly are out of a job and can't find work again. It's a good thing President Bush is putting a lot of money into faith-based programs because I really wouldn't have a prayer otherwise."
SERWER: Oh good. Clever.
CAFFERTY: Time now for next week's e-mail question of the week. It's this, will you consider buying a hybrid car in the future? Send your answers to us at INTHEMONEY@cnn.com. And you should also visit our show page at Money.com/inthemoney. That is where you will find the address of our fun site of the week. Take the test; find out if you're a "Star Wars" geek.
Thank you for joining us for this edition of the program. My thanks to CNN correspondent Susan Lisovicz, "Fortune" magazine editor at large Andy Serwer and Money.com managing editor Allen Wastler.
Join us tomorrow, 3:00 Eastern Time, when we'll take a look at the fast food tax the mayor of Detroit, Michigan, wants to put on the menu there. We'll talk to a Yale professor who thinks this idea is on the right track, tomorrow at 3:00 Eastern. Hope to see you then.
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