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YOUR MONEY

Federal Government Spending on Life Support; State Budget Crises; Unemployment in America; New American Workforce; Restoring the American Dream; Back to Basics

Aired March 5, 2011 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ALI VELSHI, HOST: March madness has officially arrived.

Welcome to YOUR MONEY. I'm Ali Velshi.

Federal government spending is on life support, barely avoiding a shutdown with a two-week extension. Some states facing budget crises of their own leading to angry protests about the future role of unions in America. And throughout the world uprisings in North Africa and the Middle East sending oil prices surging.

Stephen Moore is an editorial writer with "The Wall Street Journal," joins me now.

Stephen, one issue at a time.

STEPHEN MOORE, EDITORIAL WRITER, "THE WALL STREET JOURNAL": OK.

VELSHI: When these protests in state capitols subside, will unions, which have been weakened over the last 30 years in America, will they come out stronger or weaker?

MOORE: Well, I don't view this as an assault against the unions but I do think this is a really important fight for the future of finances of state and local governments across the country. One of the things I try to tell viewers that this isn't just about Wisconsin. What's happening in Madison, this is about what is likely to happen in many, many states if they don't get their public pensions and their public health care under control.

And so, I think the stakes are really high here, Ali. I think that in the end that these legislatures are going to do the right thing. I don't think the governor in --

VELSHI: Sorry, do the right thing, do the right thing, you mean go ahead with these plans that some people call union busting?

MOORE: Look. I think the most important thing is you've got to get these expenditures under control for these public sector -- the benefits. I mean there was a study that just came out this week by more liberal economist than me that says look these are the unfunded liabilities of the health care and the pension benefits of public employees at the state and local level, just closing in on $2 trillion. That's a big number. What it means, Ali, is if we don't do something about it, a lot of the money that should go for roads and for the schools is going to go to retirement.

VELSHI: OK. Stay right there. An economist more liberal than me, I thought that was a cute line.

Chrystia Freeland is the global editor at large with Reuters.

Chrystia, there are two things going on here, number one, the stuff that Stephen was talking about, underfunded pensions, liabilities like that, the other one is the fact we've had this recession hanging over us. While the federal government is still struggling to get its budget together, some of these things happening in states are a direct result of the fact that these states are getting less money from the federal government.

CHRYSTIA FREELAND, GLOBAL EDITOR AT LARGE, REUTERS: Absolutely. But, Ali, can I just quickly respond to Stephen's points?

VELSHI: Sure.

FREELAND: He won't be surprised that I disagree with his conclusion. So he's absolutely right. Yes, of course, states have to get their budgets under control and that is a huge issue. But it's also absolutely clear that in Wisconsin a Republican governor is using this as a pretext for beating up on the unions. And there are two pieces of evidence for that.

One, how come the policemen and the firefighters who happen to vote Republican are not part of this limitation on collective bargaining?

And second, you spoke, Stephen, about the need to get the budget under control. For sure, but the unions had made the concessions on the money. So why is the governor pushing so hard on the collective bargaining? That's not about money, that's about politics.

VELSHI: We're going to hold on the answer to that one. We're going to talk about what part of what's going on in Washington is affecting Madison and every one of these states.

FREELAND: OK. So what's going on in Washington is exactly as you said, Ali. Right? You know Washington has less money and that means it's giving less money to the states. And that's about the economy being still incredibly weak.

VELSHI: All right. Let's ask Joe Queenan, a satirist, a humor columnist at "The Wall Street Journal."

Joe, when it comes to the threat of a government shutdown in Washington, it's actually kind of tough to tell the Democrats apart from the Republicans.

Let's listen to a Republican and then a Democrat. Listen to this.

(BEGIN VIDEO CLIP) REP. JOHN BOEHNER (R-OH), HOUSE SPEAKER: Our goal is to cut spending. We're listening to the American people. They don't want the government shut down, they want us to cut spending and that's what we're going to do.

SEN. CHARLES SCHUMER (D), NEW YORK: Two week stop gap solutions only delay the adult conversation we need to have. This is a stalling tactic by House Republicans because they're unwilling to enter into serious negotiations. It has grave consequences to doing business.

(END VIDEO CLIP)

VELSHI: OK. So both Democrats and Republicans say they want to deal with deficits, they want to create jobs, both sides say it's the other side that's causing the problems.

Joe, do you see anyone in either party anywhere in America, pick another party if you'd like, capable of displaying the type of leadership necessary to propose what are going to be politically unpopular cuts in spending and possibly tax increases?

JOE QUEENAN, "THE WALL STREET JOURNAL": Yes. The leadership will be provided by the president of the United States, and it will start being provided the first Wednesday in November 2012 as soon as he's been re-elected. He's not going to touch that trip wire. He's going to let the Republicans hang themselves on the Social Security issue. He's not going to go anywhere near it. As soon as he is re-elected he will provide the leadership that only he can provide and for two reasons.

One, he's the president of the United States, and in most cases Jimmy Carter being the obvious exception, that man is strong enough and charismatic enough to provide leadership. And the second thing is the Republicans don't have a leader.

The Republican -- John Boehner is not a charismatic person. Mitch Daniels, we see, nobody knows who he is. Christie, a bit too abrasive. Barack Obama is the man who has the capacity and the personality to provide the kind of leadership that we need and he'll provide it one day after he's elected.

VELSHI: Over to you Stephen Moore, a conservative. Where does the conservative fiscal leadership and the Republican Party leadership come from on this issue?

MOORE: Well first of all, I mean I actually agree with that entirely. Look, I think there's no question Republicans don't have the charismatic leader that the Democrats have. Barack Obama is a great communicator. There's no question about it. But on this leadership issue, is it leadership for the president to put out a budget that says we're going to lead for the next ten years all of these government entitlement programs that are exploding, Social Security, Medicare, Medicaid, on automatic pilot? I don't see that as leadership.

Listening to you all talk I'm thinking about that song from Annie, tomorrow, tomorrow, you're always a day away. When will we finally see some presidential leadership? Because until we do see that, I don't see these big entitlements being tackled.

VELSHI: Chrystia, what's your view on this?

FREELAND: Well, actually, I'm with Stephen here. I think that the whole debate between now and 2012 is angels dancing on a head of pins. It's but a tiny percent of the budget and no one is actually talking, I think it is even wrong to talk about entitlements; no one is talking about health care. The only other thing I would say is, you know, the president did try to take on health care and he didn't get a lot of help from the Republicans. And that is the big thing which is driving all of Americans.

MOORE: Hold on, wait a minute; you got my blood boiling on that.

FREELAND: Good!

MOORE: I mean look how is it, we know that Medicaid is going bankrupt, and what the president did was add 30 million more people to -- you don't put more people on board the Titanic and that's what we did with Obama care.

VELSHI: All right. Hold on right there. We're going to continue this discussion.

Uncertainty extends well beyond our, by the way, these conversations we are having, well beyond our borders, because of those uprisings taking place through North Africa and the Middle East. Why is the unrest over there going to mean a sharp rise in the prices you pay for a lot of things? I'll tell you on the other side.

(COMMERCIAL BREAK)

VELSHI: Oil prices soared again this week to highs we haven't seen in 2 1/2 years. Gas prices continue to follow. Oil is hovering around that $100 a barrel mark. The spike comes as violence escalates in Libya spreading concerns about further disruptions to oil in the region. There have actually been very few disruptions to oil at all.

Chrystia, at what point does the unrest in the Middle East and North Africa send oil and gas prices to highs that could actually start to threaten this very fragile recovery that we've got going on around the world?

FREELAND: At this point, no. I think the oil price is already, you know, the recovery, as you said Ali is fragile, and this is really going to be a shock for America. I think it shows yet again that postponing problems does not solve them. If America had imposed a higher when oil prices were lower the country would be in a much better place to deal with this.

VELSHI: All right. The average price for a gallon of gas this week by the way shooting up topping $3.45 a gallon, but we've heard from people across the country, we've got pictures, our camera men have pictures of gas above $4.

Joe, the downside to $4 a gallon gas and rising energy prices, that's obvious, we pay more. But rising energy prices are the only way, according to some people, that we are actually going to lower our dependence on imported oil.

QUEENAN: Make up your mind for once and for all. Every six months we go through this. Every time the price of gas goes up, we say we're going to get serious about energy efficiency, we're going to go up to Canada, and we are going to get all that stuff, the shale and everything like that. Then the prices go down and we completely forget it. Oil prices soared again this week to highs we haven't seen in 2 1/2 years. Gas prices continue to follow.

Make up your mind what you're going to do, once and for all. Once the price gets about $100 then we start doing the research, down below our basements looking for oil.

VELSHI: Absolutely right.

QUEENAN: Then they lower the prices and it's a trick. They keep -- they get to $101, we get serious, they lower the prices. We have to get serious once and for all or stop having the conversation.

VELSHI: I'm curious as to where you fit into this Stephen on oil and energy prices.

MOORE: Well, look. I think the higher oil prices and higher prices when you pump at the gasoline pump, those are like a tax on the American consumer. So there's no question, Ali, that's going to hurt this recovery. The good news is we've got a great jobs number this weekend, so I think we're seeing a big pickup there.

But look, I've been saying for 25 years, let's be drilling, let's drill for all of our natural resources that we have in the United States. We should be drilling in Alaska, we should be drilling --

VELSHI: The bottom line, it's still not enough. It's not enough. I mean we are not increasing the price of oil in America, it's China and its India where they're -- you know our demand is flat. It has been for a long time in the United States.

MOORE: But you know what, Ali. OK. Let's talk about natural gas. We're finding so much natural gas; see I'm convinced natural gas is the fuel of the future. And we have a Saudi Arabia for example.

VELSHI: You're right but we're not really doing anything.

MOORE: I agree. We agree. We've got to get at that natural gas because that could be a substitute for oil.

VELSHI: All right. Stephen, what can the Republicans do right now to make sure that voters don't add rising gas and energy prices to their list of grievances?

MOORE: They're going to. There's no question about that. This is something that hits every one of us at the pocketbook and by the way it's not just gasoline prices. You saw what happened last week with food prices. Those are rising, $3.50 for a box of Cheerios now. We're seeing that by the way, airlines just declared this week they're going to raise their prices. So I'm worried about inflation, Ali, and that's a tax on American consumers.

VELSHI: Joe, is this an ivory tower conversation we're having? I mean are people out there thinking there's a recovery or are they thinking the economy sucks? What's going on?

QUEENAN: The economy sucks. I personally am willing to spend 20 cents extra for Cheerios if it will get rid of people like Gadhafi, but I don't drive far and I take public transportation. If you're out in the Midwest, if you're out in the west and you drive a lot, you're feeling this now and you're definitely not feeling the recovery. If you've got kids who have never even seen what a job looks like, you don't believe this recovery has taken root.

VELSHI: All right. If you're not quite feeling this recovery, you're not alone. Our next guest went from homeless to the head of the boardroom and he's going to tell you exactly how you can begin your own comeback story, after this.

(COMMERCIAL BREAK)

VELSHI: We first met Chris Gardner when his remarkable story of homelessness to CEO was portrayed by Will Smith in the movie "Pursuit of Happyness."

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Chris Gardner.

WILL SMITH: How are you? Good morning. Chris Gardner. Chris Gardner. Good to see you again. Chris Gardner. Pleasure. I've been sitting out there for the last half hour trying to come up with a story that would explain my being here dressed like this.

(END VIDEO CLIP)

VELSHI: OK. I'm sure you've all seen the movie. What an inspirational movie? Today, we know Chris Gardner as the CEO of his own brokerage firm, the author of "Start Where You Are: Life's lessons in getting from where you are to where you want to be." Chris is with us now.

Chris, good to see you again. All sorts of people write books about pulling yourself up by your boot straps and doing it well, you really told us an interesting story about how you've succeeded.

Let me give you the scope of the problem though for the rest of the country this is not you. I've got this chart goes back to 1917. We've divided it up; the red line is the top 5 percent of wage earners in the United States, the blue line everybody else, 95 percent of Americans. Take a look at this. From 1917 all the way to now to 2008 and a little bit beyond, wages for 95 percent of wage earners in the United States have been stagnant. Take a look at the top 5 percent. They weren't that spread out back in 1917, but take a look at what's happened over the decades, particularly in the last 20 years how they've shot up. Basically, the rich have become richer while the working stiffs have stayed pretty of the same.

What is the first step for somebody who is in that blue area in America right now who says there's this great America that has been doing so well, continues to do well, but I'm stuck. I took a step backward because of the recession, and I can't get out of it.

Tell me what you say to most of America.

CHRIS GARDNER, AUTHOR, "START WHERE YOU ARE": I would say to you what I -- where I was. At my lowest point, living in a public restroom with my 14-month-old son tied on my back, I had to ask myself some very difficult questions every day. And the most difficult question was, how did I get here?

The answer was, I drove here. I had something to do with the circumstances and conditions that have become my life.

And there was something very empowering about that. Because once you say, I drove here; the other side is, well, if I drove here, I can drive out of here.

VELSHI: So you're saying there's a way out of it.

GARDNER: That's the first step.

VELSHI: All right. Christine Romans hosts "YOUR BOTTOM LINE," every Saturday at 9:30 a.m. Eastern, she joins me each week.

Christine, we have been in a recovery, a recovery. They said the recession ended almost two years ago now. Why doesn't it feel that way for so many people from whom we hear?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Because the bottom line of that chart, those people are more likely to have their wealth tied up in two things that have not recovered very well. Your house and your job and those are the two things that real people really care about. If you're going to build wealth and you are part of everybody else, the 95 percent, that's where your income is coming from. That's where your savings and investment is coming from, your house and job.

VELSHI: OK. You bring an interesting thing, and I want to bring Chris into this discussion. You said something, because I know you know it really well, so you sort of said it in passing but I want to stop you and talk about you build wealth. Because regular people who have bills to pay have trouble building wealth.

Let me show you this chart. I want to break it down by race for a second. 49 percent of whites, according to "The Washington Post," Kizer Family Foundation and Harvard University, 49 percent of whites own stocks, bonds or mutual funds. One half of that proportion, 25 percent of blacks do, 16 percent of Hispanics do.

Chris, you're a stockbroker. You wanted to be a stockbroker. This is what you got into. What does that statistic say to you?

GARDNER: That says to me that African-Americans are the minorities and just all Americans right now, all Americans, this is a time for all of us to become a lot more engaged in our own financial literacy, our own role in preparing for our retirements and becoming a lot more active in, engaged in, and owning the responsibility of knowing.

What that means is, especially in some communities, the discussion of the stock market, the discussion of the economy has got to be dinner table conversation. And I'm telling you, I believe this is going to happen.

VELSHI: It is probably in our families.

But, Christine, I interrupted you because you were talking about wealth building. There's a whole segment of American society that is not engaged in wealth building.

ROMANS: Right. And when you look at the top line of that chart, keep going back to that shocking and fascinating chart, I mean, what you think, and I think you and I have talked about this, Ali, is the people on the top of that line they are passing a little something on, so there's some kind of comfort and some kind of a starting point for the next generation.

And if you are in the bottom, and you don't have a house, you are holding on to a job for dear life, you're not invested in the stock market, you're not passing anything on, you're not passing -- you know what I mean? It just becomes a self-fulfilling staying afloat is what you're trying to do and a lot of America right now is trying to stay afloat even as we're the richest country in the world.

VELSHI: All right. Chris, let's go back. I want to go back to your initial point, you were living in a bathroom with your kid, and you know what we hear about today? We hear about a group of people called the 99ers. They've been unemployed for more than 99 weeks, their state benefits have run out, their federal benefits have run out, some of them actually are going to friend's houses and living or living in their cars and trying to get a job. Statistics indicate that people do not like to hire people who have been out of work for a long time, who maybe don't go to a job interview dressed properly for it or feel like they're engaged. That was you.

GARDNER: You know, I think a lot of people are going to have to begin to realize is first of all, this is indeed showing itself to be a jobless recovery.

VELSHI: Yes.

GARDNER: And a lot of those 99ers, they have skills, talent and expertise that they're going to have to transfer into owning their own businesses. There's going to become a rebirth in the entrepreneurial spirit in this country that I believe is going to be the missing leg on the stool called a recovery. The jobs are not going to come back. And let me say this, you mentioned something earlier about folks said technically the recession is over.

VELSHI: Right.

GARDNER: The only people that are saying that have jobs. They're economists.

ROMANS: I hope you're right about the entrepreneurship, because I know one of the stories we've been covering as well, quite frankly there are companies who are putting out job applications saying we will only consider you if you currently are employed. The unemployed need not apply. That is happening, the EEOC, the government is investigating it. So you're right, it might be entrepreneurship might be the only thing that will get somebody employed.

VELSHI: When you think about microfinance and things like that, Chris, in poorer parts of the world there are banks that give people small amounts of money to start small enterprises, maybe that's the kind of thing we're going to have to see here in America, where unemployed people can start small enterprises. But right now, they go to Bank of America or Citibank and you don't have a job, you're not able to keep your house, you're not getting a loan to start a business.

Chris, always a pleasure to see you, come back and visit us a little bit more often. Christine, hang out right where you are.

The American workforce is going to have to be two very specific things in order to succeed; I'm going to tell you what those two things are and how you can be a part of it next.

(COMMERCIAL BREAK)

VELSHI: You know, every month we get this unemployment report, and every month Christine and I have some kind of a bit of an argument, is it half full, half empty, good, bad, we didn't argue this time.

ROMANS: I know.

VELSHI: The job numbers came out on Friday and we didn't argue. We embraced. We actually both thought that it's -- it was great. The unemployment rate went down a smidge. You and I don't really concern ourselves as much about that, but we created a number, 190,000 jobs in February in the United States and we liked that.

ROMANS: We liked that and liked the private sector job creation was 222,000. We liked that the unemployment rate fell over the last three months, the fasted it has done in 28 years. Look it's all in the right direction.

But before you get too excited about what's happening right now, we really need to be talking about where this economy is going. What kinds of jobs are going to be created? Because you can sit around forever waiting for these numbers on this wall to --

VELSHI: Let's just show them what the numbers are, 8.9 percent that's your national unemployment rate. I know, before all of you start tweeting me and telling me, no, no, it's double that. There are all these people unemployed, you're right.

But this is what the government puts out. It probably is 16 percent or 17 percent when you count everybody in. We added 192,000 jobs, new jobs, that's net new jobs in February actually 222,000 jobs in the private sector, which is where we want them to come from, but we lost government jobs. Obviously you know that's happening.

ROMANS: That's going to keep happening.

VELSHI: That's Wisconsin, that's Indiana, that's Ohio.

ROMANS: That's what you see in the state houses. That's going to keep happening and we know that's going to keep happening.

VELSHI: All right, so this is the now.

ROMANS: That's the now, but, you know, you could sit around forever waiting for these jobs to give you the job of the future, but we know that new things are coming and that your skills need to be a little different for the next 10 years.

According to Career Builder, they put together three different kinds of areas. It's technology, it's medicine, it's environment. In technology, think cyber security specialist. Think social media manager. Think mobile applications developer, anything that has to do with software and the brainiac kind of stuff that we're using on our PDAs.

VELSHI: And by the way, that is one of those areas, which you can move into midcareer. We're going to have to change jobs midcareer. For those of you long-term unemployed, that's one of those areas you can go into and maybe some of your old job experience could actually transfer over.

ROMANS: That's right and in medicine, there are all kinds of jobs in information technology jobs in medicine. There are kinds of different kinds of jobs in the electronics record management, medical coders, lots of different things.

Andrew Ruben from NYU always says that they're actually going out there and trying to train people, liberal arts people on some of these medicine-type jobs because they have so many things going on there.

And in environment think organic farming. It's booming. Wellness, all kinds of wellness professions, that's medicine and that's also in environment, sustainability managers. All these things --

VELSHI: New energy.

ROMANS: You know, there are new things happening and there are new kinds of skills valued over the next 10 years.

VELSHI: All right, Diane Swonk joins us now.

The new American workforce is going to have to be two things. It's going to have to be mobile, Diane, and it's going to have to be dynamic. We constantly talk about that. How do we make this not an ivory tower conversation? How does our viewer figure out how to be mobile and dynamic?

DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: Well, I think the hardest issue is the mobile side. The dynamic side is, of course, education, which is also a very difficult issue because we are splitting this country between those who are educated and those who are not, those who are getting the jobs and those who don't.

But on the mobility side, you know, of course, the issue is that your house under water, can you sell your house, can you move and that is one factor that has held back the recovery. Because we are creating, we have a lot of jobs unfilled out there because people can't move to where the jobs are because they're stuck.

Now one of the things that's really changing and this needs to be really thought about is that rents are now exceeding the marginal costs of home ownership in many areas. If you're in one of the conditions that you might be able to rent your home out and move and rent something else that might be a way for you to take a job somewhere else. I think that's very important.

You actually see it in the reality TV. It used to be, you know, flip that house. Now it's income property. Ways to make money off renting, part of your property out. I think that's a very important thing for people to be thinking about, especially as they're trying to manage mortgage payments that might be under water, but they don't want to default on it and run their credit --

VELSHI: So the old American dream was the house with the white picket fence. Now the new American dream may actually be the house you can definitely rent out and move somewhere else.

SWONK: Exactly.

VELSHI: And maybe make some money on it.

SWONK: Exactly. And we are actually seeing in many, many of these markets because the rent -- we haven't built a lot of apartment space. People want to live in a home. They've lost their home so there is opportunity there and we have to rethink that as Americans for the American dream as we've been talking about already changing quite dramatically. Maybe it was a dream that was more of a myth anyway.

VELSHI: The best thing we can do for people and I'm going to talk to Fareed Zakaria about this, but I'm also wanting to talk to Richard Florida about this. He's the author of "The Great Reset" because these are guys who get their mind around the fact that success will come from re-evaluating the world in which we live in. That is everybody's job, Richard. It's the job of the long-term unemployed. It's the job of the people who are happily employed right now. It's jobs for Christine and me, to think about what will our next career look like. It is a tough sell for Americans, but what does this mean? You have talked a lot about a mobile work force. What does it mean for you?

RICHARD FLORIDA, AUTHOR, "THE GREAT RESET": Well, first, Ali and Christine, two other big things of good news and I agree with you. That big unemployment rate, the one that captures everybody is down 2 percent and the one for the least skilled people in the country without a high school degree, that unemployment rate went down 4 percent.

So those are, I agree with you, this is good news, it's not perfect news but it's better news. Now, what we have to do to get people moving. You know, we're going to create another 50 million new jobs this next decade and we take everyone who's going to change jobs. You know, people are going to change jobs, move from one job to another. We're going to create 50 million new jobs.

Many of them are going to be high skilled knowledge work, about half. The rest are going to be lower skilled service work and the skills we need is not just a college degree. You know, about 75 percent of those with the knowledge jobs do have a degree, but 40 percent of people working in knowledge jobs don't.

The two skills that Americans need to get in addition to being mobile and moving to where the work is, it's not just a good analytical mind and high grades, we've got to instill how to sell things and how to market companies and market themselves.

Every American now has to think of themselves and their family either as a startup business, or if you don't like that, you got to think of yourself as a nonprofit and develop a strategy for being flexible, mobile and dynamic, but sales and marketing are the things to instill in people.

VELSHI: Very interesting that you say that, because Chris Gardner from "The Pursuit of Happiness" says that we need an entrepreneurial spirit for those people who have been without work, and Fareed Zakaria in his cover story in "Time" this week talks about the fact that we are going to have to sell ourselves in that way.

So I think this is exactly where we have to be. Diane, without severing the link between company sponsored health insurance and the employee, because that is why so many people stick to their jobs, that's different where Richard is in Canada. Is it possible to create a truly dynamic and mobile workforce?

SWONK: Well, the short answer is no. I mean, people -- health insurance is one of the primary reasons that people stay where they are. It's one of the primary reasons that people don't get divorced right now when they want to get divorced because they need to keep their health insurance. These are issues that are very difficult. You know, it's one of the things America is known for, its mobility and not its immobility and now this is something working as a factor against us. So we're going to have to see a more portable health insurance out there. We're going to have to see a lot of changes, but I want to underscore something Richard said.

It's very important this idea, it's not just the college educated, that I think it's a real myth that our American workers are not skilled or don't have a set of skills that are marketable. They just have to rethink about packaging them.

And I think, you know, being a dyslexic myself, I know that a lot of construction workers are dyslexic and they didn't get higher degrees because they were dyslexic. Well, the bottom line is, you know, there are very intelligent people.

It has nothing to do with intelligence, at least I believe that, and I think this are the things that we need to tap into as tapping into people's inner strengths and redefining ourselves and being able to redefine yourself in this labor market over and over.

VELSHI: All right, the idea of reinvention. You started this conversation by showing me the jobs of the future. We have a bit of a problem, though, because it's not all about reinvention, it's about preparing people to train for the right kinds of jobs. How often do you and I talk about the fact that our high schools don't do that?

ROMANS: We have 2,000 dropout factories in this country. How are kids in those schools going to be prepared for the jobs that I've told you about? One of the things is that many of the big thinkers have just given up on sort of the middle class jobs you don't need a college education for that might be manufacturing work that's going to -- what are we going to do in its place?

VELSHI: Right.

ROMANS: Because not everybody is going to be a mobile apps developer or an engineer or all of these other jobs that we're telling you about. So what makes me sad kind of is that we're talking about the big think issues, the workforce of the next 10 years and a lot of people who aren't ready for it yet.

VELSHI: I hear you, Christine, but we don't have any more choice. We don't have a choice. Every American does not have a choice to not think big right now. That's the problem. There are no solutions for a future of high school educated people.

ROMANS: A globalized economy is moving faster than American families can keep up and that's why I can be sad, but still look to the future.

VELSHI: I'm with you. I am sad but we have to move along with everybody else and we'll continue to try to give our viewers the best information we can about trying to sustain this American dream. It is, as Christine says, it is on life support. Can we revive it? I just mentioned Fareed Zakaria has more than a few things to say on that issue. He's here next.

(COMMERCIAL BREAK)

VELSHI: Joining me now, Fareed Zakaria. He is the host of CNN's "FAREED ZAKARIA GPS." He's thought a lot about the future of the American workforce. His special, "RESTORING THE AMERICAN DREAM," airs this Sunday at 8:00 and 11:00 p.m. Eastern Time right here on CNN.

Fareed, earlier in the show, we were speaking about the need for a more dynamic and mobile workforce in America. It's something that you've thought a lot about. What does that mean? I often when I say it on TV or I discuss it, I have viewers send me messages, what do you mean by a mobile and dynamic workforce?

FAREED ZAKARIA, HOST, "FAREED ZAKARIA GPS": Well, it means a bunch of different things, but probably the first one it means is you've got to be willing to physically move.

VELSHI: Right.

ZAKARIA: As you know Americans are pretty good at that. Not right now because of the housing problem because a lot of people have mortgages and homes they can't sell. Mortgages that they can't service or they can't leave. But perhaps the larger part of it is we need to acquire skill sets rather than thinking about being cogs in a large machine.

Much of the American workforce to sort of itself in a sense of being cogs in a large corporate machine working up that machine, all good stuff. It used to work very well. But today what you really have to think of yourself as somebody who's a skill-based entrepreneur who might today be working at Ford, tomorrow may be at an auto parts company.

A third may be actually starting his own company that deals with some of the same issues, and you're probably going to move jobs ten times in the course of your life, and you've got to be able to have the skills that allow you to move around like that.

VELSHI: So the mobile part is mobile, the dynamic part is that this is going to be things are going to change. Circumstances are going to change. You write a lot about this in "Time," you write about it in this issue as well, the idea of outsourcing. It has become a dirty word in America. You think that it's a misrepresented term or a misunderstood term.

ZAKARIA: Well, it's just such a dominant reality now of the way in which we do business, because you have these global supply chains. You know, in effect people make stuff all over. GE jet engine is now made in 22 different countries.

So when people talk about outsourcing, companies aren't really doing outsourcing anymore, what they're doing is investing in their operations in China, India, Brazil or Indonesia and not investing as much in America because you get more bang for the buck there.

VELSHI: Right.

ZAKARIA: It's not like they're physically moving jobs overseas, it's that they're growing their operations in these other places. So what you've got to do is understand that's the world you live it. You've got to take advantage of it. Let the low cost commodity stuff, the making shoes go there.

Keep the high value added stuff, designing stuff, and you take advantage of it. If you think of yourself as entrepreneurial, you ask yourself, OK, I'm going to try to manage the stuff that's going on in India, China, Brazil and what can I do? What's left for me to do here? If you don't think in those terms it's going to happen.

VELSHI: But this is -- one of the things, what we used to call the first world or developed world had that the developing world didn't have was that a broad middle class and a greater sharing of wealth. Now I know you like the numbers as much as I do, you can look at this a million ways. You can see the bottom 95 percent of society has not seen much increase in their wages, has not seen much increase in their wealth.

And yet the top 5 or 2 percent have seen that. So when you say how do I take advantage of what's happening elsewhere, what's left for me, how do workers, how do my viewers think about this? They know jobs are elsewhere. They know that the economic power of the world is shifting elsewhere. What is the best way for regular Americans to take advantage much these shifts?

ZAKARIA: Education, education, education and it's not an education that stops with a college degree. It's learning new skills, training yourself. I'll give you a simple example. Almost anybody in America who knew how to speak Chinese is going to find themselves powerfully advantaged because they will be able to manage supply chains dealing with people in China. They'll be able to do all kinds of stuff. That's just one example. It's something you can do as an adult.

Look, it's tough, but then there's stuff relating to software. There's stuff relating to, you know, certain kinds of world processes, but ask yourself how you do something that isn't going to be commoditized. In other words, if you're in a race against a Chinese worker or Indian worker who's making cents on the dollar, you're not going to win.

VELSHI: Right.

ZAKARIA: If you're in a race where you say I'm going to do something fancy, complicated, look at Germany. Germany has managed to maintain manufacturing. Why? It's simply the BMW effect. They make highly engineered, perhaps overly engineered products, put a very high price on those, and as a result they have the highest level cost in the world and they're still engineering, manufacturing powerhouse.

VELSHI: I want to put the cover of the "Time" magazine issue up, because it's very clever. It's got a -- if you look at it one way, it says America is in decline and if you turn it upside down, it says no, America is still number one. The American dream, what's happening?

ZAKARIA: It's very tough because the American dream is what you're talking about, the middle class. It's about the broad middle class and I think we're never going to get back to that American dream. The dream of the 1950s, where some regular person without a lot of education could be a steelworker, make 60, 70, $80,000 a year, buy a house, put his kids through college, that dream is gone.

I think we will have to come up with a new American dream, very of the kind you were talking about, dynamic, mobile, flexible, and entrepreneurial. You'll fall down a lot more often than you used to fall down in the old American dream. The key is having the skills to pick yourself up again.

VELSHI: You know, my son, I keep telling him that he should learn Mandarin. He spends three days a week going to chorus classes. I don't think he has much of a future in singing and I said, you need to learn Mandarin. He says, Mandarin doesn't get you the girls. I think there are going to be more girls who speak Mandarin than in his chorus class.

ZAKARIA: Do you what Tom Friedman once said, the great line is that the problem in -- in China, Bill Gates is Britney Spears. In America, Britney Spears is Britney Spears.

VELSHI: Good way to say it. Always enjoy talking to you, Fareed. Come and spend more time with us. We of course like to spend time watching your show, "FAREED ZAKARIA GPS" and, of course, pick up "Time" magazine, which has some great coverage from Fareed on the changing world in which we all live.

All right, what can toilet paper, cheese and soda pop do for your investments? I have some very specific answers after the break.

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VELSHI: The economic recovery is not coming fast enough for many Americans. Belt tightening is still a reality, but one thing we don't cut back on are consumer staples. You can live without the latest designer shoes or a new set of golf clubs, but it's hard to cut corners on items like milk and toilet paper.

So you may want to look at investing your money in companies that sell consumer staples. Our good friend, Ryan Mack, the president of Optimum Capital Management joins me now.

Ryan, you have two picks here in terms of consumer staples. Let's start with the consumer staples sector Spider. Spider is a brand name for one of these baskets of stocks that you can buy one thing like a stock, but it's like a mutual fund. The ticker is XLP. Tell us about it.

RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: Actually, it's a great investment for individuals looking for diversification (inaudible) exchange rated fund as opposed to try to go towards the individual stocks like the Proctor and Gamble or the Colgate. You might want to be able to get the entire basket of stocks in XLP and this is a market cap with over 50 billion.

They have a lot of focus on these wider type investments, more established firms, firms around for a long time. They have a steady and stable cash flow. These firms, again, more of a defensive holding where as you said earlier you might be able to live without the cars or certain things, but everybody is going to be able to continue to buy the Gillettes and the Colgates and those type of things.

So XLP is a great investment for that, but there are risks to individuals instead of going for the private or the larger companies, they might want to go towards the generic. That's a risk that the companies are more established if individuals -- VELSHI: Right, although we were showing the top five holdings there. Proctor & Gamble, Wal-Mart, Philip Morris - stop smoking when it gets too expensive, but Coca Cola still seems to hold its own and Kraft foods.

That's one of the ETFs. You've got another one. ETFs are exchange traded fund. You have another one you're suggesting. The ticker is KXI, it's the I shares S&P global consumer staples index fund. The difference here to me, sounds like it's global.

MACK: That is the main difference. You go into a company like a Nestle or the British American tobacco companies. These are companies you get a more global perspective, same various types of risks. Market cap over 50 billion.

The expense ratio is a little bit slightly higher than XLP, which is 0.20. This expense ratio is 0.48, but again, the expense ratio with individuals should be looking for investing are still great comparatively.

VELSHI: Right, compared to an actively managed mutual fund, but the performance of these two have been relatively similar. The first one was 8.7 percent one year and this one is 9.6.

MACK: Yes. Again, they have had great returns. Almost 90 percent correlated with the S&P 500 over the last 3 years or so, but, again, these are companies - they're going to get a good steady return.

Again, not the most exciting things in the world, but if you're a little bit tired of all the wild swings, this is what the consumer staples are all about.

Making sure that you're going to get that boring stable amount of return that you want to get and you don't want a lot of risk involved in the portfolio.

VELSHI: Boring and stable is the new black. Ryan Mack, great to talk to you. As always, thanks so much for being with us.

Up next, I have a very strong message for one "Fortune 500" CEO who had some very strong words for President Obama. My "XYZ" is next.

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VELSHI: Time now for "The XYZ of It."

Last weekend "The Financial Times" published quotes from an interview it conducted with George Buckley, the CEO of 3M. That's the company that makes scotch tape and post-it notes and a host of other things that line our office desks and our home shelves.

In the interview, Buckley accused the Obama administration of being, quote, "anti-business" calling the president's instincts Robin Hood-esque. He went on saying that politicians like President Obama forget that big business has and I quote again, "a real choice between manufacturing in Canada and Mexico," which he argued tend to be pro- business or America, which he inferred is not.

Now, that seems unusually inflammatory for a CEO, but I would like to discuss it more and get to the bottom of what he would like to see changed so I invited him on to the show. His staff declined. After dropping those fighting words it seems they're done talking about it. In fact, Buckley seems to have disappeared since the article came out.

As far as I can tell he's not talking to any other media. Well, is he right? The White House would disagree. The president's new chief of staff comes from the world of business. He's corralled one of the greatest industrialists of our time, GE's Jeff Emmelt to head a group of blue chip CEOs to help create jobs. I have spoken to several major CEOs who saying this administration is particularly open to them and their concerns.

So I'd like to know what Buckley thinks of that. I don't see how in times like this it's responsible for the CEO of a major American corporation to lob a mortar over the trench and then retreat for cover. George Buckley, if you want to speak for American businesses and take a stand, the mic is available. Be brave enough to step up to it and take the tough questions. Until you do, I'm done using Post- its.

That's it for me. Thanks for joining the conversation on YOUR MONEY this week. We're here every Saturday 1:00 p.m. Eastern, Sunday 3:00 p.m.

Also, catch Christine Romans on "YOUR BOTTOM LINE" Saturday mornings 9:30 a.m. Eastern and connect with me on Twitter 24/7. I'm @alivelshi.

Have a great weekend.