Out-of-control healthcare costs. Oppressive student-loan debt. Accelerating climate change. Mass incarceration. What do these seemingly unrelated crises have in common? Les Leopold sees them all as an outgrowth of a core economic problem: extreme inequality.

In 2017 the three richest Americans held more wealth than the bottom 50 percent of the population — no surprise when you consider that incomes for the bottom 50 percent have been stagnant since 1980. In his book Runaway Inequality: An Activist’s Guide to Economic Justice, Leopold tries to explain how this happened. It’s not an easy task. Simply put, over the past forty years wealth has been transferred to the top through deregulation, tax cuts, and complicated financial deals — a process he calls “financial strip-mining.”

“When you put too much money in the hands of a few,” Leopold writes, “and when you deregulate finance, you get a financial casino.” This Las Vegas atmosphere, he says, led to the financial crisis of 2007 and 2008. Afterward, “taxpayers provided trillions of dollars in cash and asset guarantees to the wealthiest bankers and hedge-fund managers in the world. But nothing was extracted from them in return.”

Leopold points out that the bank bailout was just one episode in a much longer story of how Wall Street came to dominate the U.S. economy. If you’re a stock-market investor, you might have benefited along the way, but only about half of Americans own any stock at all, and 84 percent of all stocks are owned by the wealthiest 10 percent. “We’re heading toward becoming what we used to call a Third World nation,” Leopold warns. Runaway inequality, he says, “will not cure itself.” To reverse it, he is seeking to build a mass movement. The Runaway Education Network (runawayinequality.org) leads workshops around the country. It currently has five hundred volunteer trainers and is seeking thousands more.

Growing up in a working-class family of war refugees in the 1950s, Leopold felt the sting of anti-communist hysteria and gained inspiration from the Civil Rights Movement. In the 1960s he took part in student protests against the Vietnam War. He earned an undergraduate degree from Oberlin College in Ohio and went on to get a master’s in public affairs at Princeton University. While there, he interned with labor leader Tony Mazzocchi and “hooked up with a bunch of radical political economists and policy analysts” who were committed to helping workers understand complex economic forces.

In 1976, along with New School economics professor David Gordon, Leopold cofounded the Labor Institute (thelaborinstitute.org), which educates workers on occupational health and safety. Rather than lecture, the Labor Institute’s trainers sit with people in small groups and help them wrestle with real-life problems. Leopold has served as executive director of this New York City–based organization since 1984 and has also been involved in efforts to form partnerships between labor and environmental activists. He is the author of two books on the 2007–2008 financial crisis: How to Make a Million Dollars in an Hour and The Looting of America. He won an Independent Publisher Award for his biography of Mazzocchi, The Man Who Hated Work and Loved Labor. And he’s a regular contributor to the Huffington Post, AlterNet, Common Dreams, and other websites.

This interview took place in 2017. Leopold and his wife, Dr. Sharon Szymanski, were about to leave their northern New Jersey home for an annual month-long house exchange with a European family. “We try to visit countries that have constrained the forces of runaway inequality,” he told me. In their time in Denmark they hoped to learn more about how that country had created an economy that worked for all its citizens.


509 - Les Leopold


Frisch: What are some indications that we’re experiencing “runaway inequality”?

Leopold: The clearest indication is the pay gap between the top one hundred CEOs and the average worker. In surveys, the American people think the gap is about 50 to 1, meaning that for every dollar the average worker earns, a top-one-hundred CEO earns fifty dollars or so. That’s quite a gap.

It turns out the gap in 1970 was 45 to 1 — close to what people think it is now.

Today it is about 800 to 1.

Frisch: How did we get to this point?

Leopold: For decades wealth from virtually every area of the economy has moved upward into the hands of a few through a process I call “financial strip-mining.” Wall Street is able to extract money from individuals and communities the way strip-mining extracts resources from the earth. Take the bank bailout after the 2007–2008 financial crisis: big banks got bailed out by the government, while Americans suffered job losses and declining home prices.

That’s just one example. Financiers extract money from individuals through the interest on student loans, predatory mortgages, payday loans, and other methods. This has been going on for forty years, and it’s changed the face of American capitalism.

Frisch: You say it’s been forty years. Why did things start to change in the 1970s?

Leopold: The seventies were a tumultuous decade. For the first time the U.S. was facing a combination of high unemployment and inflation. In my opinion this was largely a result of the Vietnam War, which squandered an enormous amount of resources and overheated the economy during the late 1960s.

Hungry for solutions, politicians turned to Milton Friedman and other economists from the University of Chicago, who claimed the only solution was to free up the private sector from government interference: cut taxes on the wealthy, eliminate regulations on big corporations and Wall Street, and privatize the public sector by selling off publicly owned utilities, lands, and other assets. Corporations would reinvest their profits, inflation would be tamed, unemployment would go down, and prosperity would be shared by all. Both political parties embraced this theory, and we still hear it today, even though the wealth has rushed upward instead of trickling down. After you adjust for inflation, the average worker’s wages have decreased over the past generation.

Frisch: This process of deregulation and privatization is what economists call neoliberalism.

Leopold: I think that’s a confusing term because it has the word liberal in it. It has nothing to do with political liberalism. Among economists liberalism refers to an eighteenth-century movement in England away from government regulation and toward free markets. Neoliberalism is the modern version of that.

Proponents of free markets say that getting the government out of the economy and unleashing the private sector will cause all boats to rise, that what’s good for big companies and financial elites is good for the rest of us, too. As inequality continues to increase unabated, however, it’s become hard to make that case. All boats are not rising.

Another part of neoliberal economic policy was the deregulation of Wall Street, which led to a new set of money-making strategies for investors. In the 1980s people called corporate raiders went about buying up company after company using borrowed money, in what was called a leveraged buyout. The debt was then placed on the companies, and the corporate raiders would take a fat cut off the top while finding ways to extract as much wealth as possible from the company. Before deregulation this wouldn’t have been permitted — at least, not on such a vast scale. But once it got going, it became unstoppable. Today private-equity firms and some hedge funds do the same thing at an even larger scale.

Frisch: What’s the alternative to neoliberal policies?

Leopold: To expand the public sector and the commons — the resources accessible to us all — for the common good. There’s nothing wrong with public-sector jobs. We need more teachers. We need more social-service workers. We need more healthcare workers. We need Medicare for all; free higher education; a modernized, environmentally friendly infrastructure. But almost no one in politics will say we should expand the public payroll anymore. That’s how deeply this free-market policy has established itself in both political parties.

For a while, during the early Reagan years, it seemed like the neoliberal model was working. But then it became clear that it was working best for the top 10 percent of the population, or the top 5 percent, or the top 1 percent. The rest of us were left behind.

We are seeing ever-increasing incomes for the top 1 percent and wage stagnation for most of the 99 percent — not because the rich work harder or have special skills, but because of tax cuts, deregulation, and attacks on social spending and unions.

It used to be that, as the economy grew, so did the incomes of most working people, and the gap between the richest Americans and the rest of us was much smaller. In 1970 the top 1 percent had just 8 percent of the nation’s income. Now that share is up to 23 percent — almost as high as it was before the stock-market crash of 1929, which brought on the Great Depression.

Frisch: How is the average American worker doing compared to workers in other developed countries?

Leopold: We’re falling behind. American workers are paid less and have far fewer benefits, less time off, and less job security than workers in Germany, for example.

Forty years ago American industrial workers were paid more than their European and Japanese counterparts. Some argued that this was why Europe and Japan were outcompeting us.

But now those countries pay their workers higher wages, and they’re still competitive, so that argument was clearly garbage. In northern Europe workers get much more time off, their wages are higher, and they have virtually universal health insurance.

How is it possible for those countries to stay competitive and have trade surpluses while paying workers more and providing better benefits and a stronger social safety net? It starts with the fact that runaway inequality is constrained in those countries. Money that would otherwise flow to a small number of very rich people instead supports the common good through taxes that are used to fund things like free higher education and vocational programs. Educated workers allow companies to produce more-advanced products, such as high-end cars and the highest-value parts of the iPhone.

Ask yourself: Why does the United States, the richest country in the world, have a crumbling infrastructure? It’s because we allow the super-rich and large corporations to avoid paying taxes. They then use their wealth and political clout to make sure the tax loopholes that benefit them remain in place. [The latest tax bill expanded them. — Ed.]

This didn’t happen because it’s the way economies work. It happened because when you change the rules to favor the wealthy and Wall Street, you will shrink the middle class. It’s not the so-called invisible hand of the marketplace; it’s the very visible hand of politicians who are beholden to wealthy donors.

The U.S. has been losing good, blue-collar, industrial jobs since the 1980s. That’s why the Steel Belt became the Rust Belt. This was not an act of God or even a result of globalization. If it were, how do you account for the fact that the U.S. now has 12 percent of its economy in industrial jobs, while France has 20 percent and Germany has 23 percent? Why haven’t they gotten rid of half their industry? Because they haven’t let neoliberalism run wild. They haven’t fully deregulated their investment markets. They haven’t turned their economic system over to the wealthy few.

Frisch: We’re often told that wages and benefits have to be cut, or factories will move overseas. People have pretty much come to accept this as a fact of life.

Leopold: If that process is so inevitable, why are automakers in Germany paying workers forty dollars an hour when they could make the same car someplace else for much less?

Forty years of runaway inequality has changed what Americans think is acceptable and fair. In the 1960s we were moving toward free higher education. Now we think it’s normal for college students to go deeply into debt. We once believed that public service is a high calling. Now we look down upon public service; our definition of success is entirely monetary. We once thought that the government should help eradicate poverty. Now we say poverty is the fault of the poor, who must fend for themselves.

Our economy does not work for all of us. It works for a small handful of elites who are extracting as much wealth from it as they can. They don’t care about the middle class. They don’t care about the number of homeless people. They don’t care about anything but their own bottom line.

The hardest question to answer is: Why have they gotten away with it? It’s a long, complicated story, but a key component is that progressives have failed to mount an effective challenge. The notable exceptions were Occupy Wall Street and the Bernie Sanders campaign. But Occupy Wall Street faded fast, and elections come and go. Sustained organization has not yet emerged, largely because each progressive group works on its own issue — the environment, race, gender, labor. We have issue “silos” instead of a common movement, so we don’t have a coherent agenda and the organizational muscle to back it.

Ask yourself: Why does the United States, the richest country in the world, have a crumbling infrastructure? It’s because we allow the super-rich and large corporations to avoid paying taxes. They then use their wealth and political clout to make sure the tax loopholes that benefit them remain in place.

Frisch: How do you explain financial strip-mining to people?

Leopold: Here’s the simplest way: When you take out a loan to buy a car, who pays back the loan — you or the car? You do, of course. If you’re a corporate raider, though, and you borrow a huge amount of money to buy a company, the company pays back the loan, not you.

Before finance was deregulated, the government frowned upon investors buying up companies with borrowed money and then placing the debt on the corporations. It was rarely done. Now it’s a way of life — and very profitable. American corporations were virtually debt-free until about 1980. Now, thanks mostly to private-equity firms, corporations are trillions in debt. With this sort of debt load, every company has to pay enormous amounts of interest to bondholders and banks. And the money for that interest has to be squeezed out of the company’s budget. The company is strip-mined.

Furthermore — and this is a critical point — the interest payments on all that corporate debt are tax-deductible, just like the interest payments on your mortgage. This is part of the reason why state and local corporate taxes, as a percentage of all taxes paid, have fallen by half since 1980. Hence we never have enough money for public infrastructure, and states lurch from one fiscal crisis to the next. To build anything, state and local governments have to go to Wall Street for funding and get strip-mined again.

There’s one more key element to financial strip-mining, which might be difficult to grasp because it is so outrageous: the stock buyback. For many hedge funds and private-equity companies, the name of the game is to buy a lot of shares in a company and then convince that company to cut expenses and use the money it saves to purchase its own stocks. This raises the price of the stock and therefore the value of the hedge fund’s investment in the company. These stock buybacks benefit CEOs, too. In 1980 about 95 percent of CEOs’ compensation was in the form of salary and bonuses, with just 5 percent in stock incentives. Now it’s the other way around, with roughly 95 percent in stock incentives and 5 percent in salary and bonuses. So CEOs have a personal interest in boosting the value of their company’s stock. They get the money to do the buybacks by cutting benefits, shifting production abroad, slashing research and development, selling off product lines, and so on.

Frisch: Why does stock value go up when a company buys its own stock?

Leopold: Two reasons: First, to buy all that stock, the company has to pay above current market value, or no one would sell. This drives the price up. Second, when a company buys back its own shares, those shares are taken out of circulation. The company’s earnings are then divided among a smaller number of remaining shares, making each one worth more. If the strategy works as planned, the stock’s price goes up no matter how well or poorly the company’s doing.

It was only after deregulation that this practice took off. Before 1982 it was virtually illegal for companies to buy back their own shares, because it was considered stock manipulation — one of the causes of the 1929 stock-market crash. But in 1982 the Reagan administration’s Securities and Exchange Commission decided the law was outdated and took off the cap on stock buybacks. In 1980 about 2 percent of all corporate profits went to buy back stock. In 2007, just before the financial crash, 75 percent of all corporate profits were going to stock buybacks. Today hundreds of companies actually spend more than 100 percent of their profits on stock buybacks. They borrow money to buy back more shares.

This has had a pernicious impact. Take plant closings, for example. Carrier Air Conditioning is moving many jobs from Indiana to Mexico in order to save about $60 million a year on labor. These are the same jobs that Donald Trump claimed to have saved during the election. Why did Carrier move them to Mexico? Is Carrier hurting financially? No, it’s the most profitable division of its parent company, United Technologies. So where is the pressure to save money on labor coming from? Just before Carrier planned its move to Mexico, United Technologies announced a $6 billion stock buyback. I think it’s fair to conclude that the money Carrier saves with the move is helping finance that buyback.

And why did United Technologies want that stock buyback? Because more than fifty hedge funds and private- equity companies had bought up a sizable chunk of United Technologies shares. Those Wall Street investors then pressured United Technologies to buy back stock and take other measures to raise the price of shares so they could reap a windfall profit from their investment. As a result many Carrier workers in Indiana are losing their jobs.

Stock buybacks are the epitome of financial strip-mining. Something that was basically outlawed before 1982 has now become normal. You read about it in the paper constantly. Even Forbes has complained that this is harming the economy. Forbes points out that the pharmaceutical industry is not investing enough in expensive research to develop new cancer and Alzheimer’s treatments. It would rather use the money for stock buybacks. This is terrible for the industry in the long run. But in the short-to-medium run, investors are going to get very rich.

Frisch: Is every publicly traded company at risk?

Leopold: Sooner or later, yes. If CEOs don’t find some way to increase the stock price, they will be thrown out. Some shareholders, known as “activist investors,” put their people on the board of directors to pressure CEOs for stock buybacks. Some CEOs resist for a while, because they don’t want to lose control of the company to these investors. And it’s insulting to be told what to do, even if it leads to an increase in their own stock options. But CEOs eventually find ways to agree.

Many people besides me now recognize how this process is damaging our economy, but both political parties continue to accept it. This shows how far the Democrats have drifted toward Wall Street.

During the New Deal era, in 1933, Congress passed the Glass-Steagall Act to separate commercial banks, where we put our savings and checking accounts, from investment banks, which take more financial risks. In the wake of the 1929 crash the government decided to provide guarantees for depositors in commercial banks, so they wouldn’t lose their hard-earned money if a bank failed. Of course, the government did not federally insure investment banks, because that would be like insuring gambling: the investment banks would be free to place more and more risky bets.

In the 1980s some Democrats, seeing Reagan’s success, decided they should be friendlier to Wall Street. Bill Clinton was one of them. After his election in 1992, he surrounded himself with pro–Wall Street advisors who believed the Glass-Steagall Act was passé and that depressions and bank runs were a thing of the past. It was time to unleash this country’s financial sector so it could better compete with the big banks abroad. So in 1999 Glass-Steagall was effectively repealed, and U.S. banks could again combine investment and commercial banking.

The problem was that the federal government would still be insuring our deposits in commercial banks, but those commercial banks could now get involved in risky investment-banking activities. This put our tax dollars at risk, should one of these big banks go under. And that’s exactly what happened in 2007–2008. In just six months 8 million people lost their jobs through no fault of their own.

Before the financial crisis, the Establishment could still make the case that deregulation was working. Incomes and employment were on the rise, and more people were buying homes than ever before. The crash of 2007–2008 unmasked the incredible flattening of wages that was actually underway. For the first time in American history, workers had become downwardly mobile.

During the eight-year recovery that followed, 95 percent of all new income generated in the economy went to the top 1 percent. Meanwhile the average wage has barely budged.

Frisch: You blame the financial crash on Wall Street, but the general consensus is that the housing bubble brought about the Great Recession in 2007–2008.

Leopold: The housing bubble was a direct result of the deregulation of finance. Without regulations, Wall Street could sell financial “instruments” that have no intrinsic value. They’re called derivatives, and they’re not like a share of a company.

To put it as simply as possible, Wall Street figured out how to let investors bet on the mortgage markets. Then they placed bets on those bets. And they convinced the three major rating agencies — Standard & Poor’s, Moody’s, and Fitch — that because housing markets had always gone up, these bets, called “collateralized debt obligations,” would never fail and therefore should be rated AAA, as safe as U.S. government bonds. The rating agencies had a difficult time refuting the complex economic models Wall Street presented, so they went along with that reasoning.

All it took was a downturn in the housing market, and these derivative products came crashing down. Wall Street’s bets upon bets started to lose value. Then the banks that had placed many of those bets started to lose value, as did companies like AIG that had insured them. The bubble burst, and the banking system as a whole started to crash. It was like 1929 all over again — only this time the government stepped in and bailed out the banks.

Frisch: What should the government have done instead?

Leopold: It should have nationalized every bank that was failing. When a small bank goes under, the government basically takes over the bank, gets rid of the management, cleans out all of the loans that will never be repaid, and either runs the bank itself for a while or sells it to private investors.

Taking over the banking system would have been a radical response, but it was the only sane alternative.

Frisch: Why isn’t there more outrage about this?

Leopold: I think the outrage is simmering. Occupy Wall Street tapped into it. In six months there were nine hundred encampments of people around the world chanting, “We are the 99 percent!” It changed the dialogue in this country. All of a sudden it was acceptable to talk about runaway inequality. That outrage helped fuel Bernie Sanders’s presidential campaign. Let’s face it, Sanders had been saying more or less the same thing since 1965, and not many people had been listening. He didn’t change; the country’s perception of Wall Street did. Frankly Trump’s campaign also fed on the bailout resentment. He benefited greatly from the fact that Hillary Clinton took so much money from Wall Street for giving a few speeches.

Frisch: What steps do we need to take to address inequality?

Leopold: There are two kinds of steps: The first kind increases the income and well-being of most Americans. The second kind pays for this by moving money from Wall Street to Main Street. Single-payer healthcare and free higher education would be an enormous boon to lower- and middle-income families. No more high insurance costs and co-payments. No more crushing student-loan debt. But they are costly programs. To help pay for them, we need a tax of a fraction of 1 percent on the sale of Wall Street stocks, bonds, and derivatives. This would generate tens of billions of dollars. That’s just one policy. We list several more on our website, including the creation of public banks.

Frisch: And you find people are open to these ideas?

Leopold: Yes, you can have a civil conversation with just about anybody in the U.S. on single-payer healthcare, free higher education, and even more-controversial points, such as a guaranteed job and a living wage. We argue that if you can’t get a job in the private sector at a living wage, then the public sector should provide employment for you. We’re not asking for everyone to have a guaranteed income for life, just a chance to earn a living by working at a job that pays a living wage.

Frisch: Why can’t the private sector provide all our employment?

Leopold: If the economy can create enough decent-paying jobs for everyone, fine. A McDonald’s employee in Denmark makes something like twenty-two dollars an hour — compared to about ten dollars an hour in the U.S. So it can be done. But it rarely happens, and when it doesn’t, the public sector has to step in. The economy needs to serve the people, rather than the people serving the economy.

Another plank in our platform has to do with workers’ rights to form unions and bargain collectively, free from employer coercion or threats. Also ending stock buybacks by reinstating the rules that were thrown out in 1982. That’s a simple regulatory change.

And a 1 percent wealth tax on anybody with more than $10 million in assets. They have a wealth tax in Switzerland, Spain, France, and Norway. Right now Americans are taxed only on income, and the super-rich are experts at dodging income taxes.

We’ve found that these proposals are overwhelmingly popular with young people. They want a world that works for them, that gives them a chance, where they can go to college without being stuck with hundreds of thousands of dollars in debt. They want a more just society. They want a pathway to citizenship for immigrants and an end to mass incarceration. They want to reverse runaway inequality and stop financial strip-mining. The problem is how to get the word out and build a movement around these issues. It’s hard to come together when we’re all trapped in our single-issue silos.

Frisch: Let’s talk about how financial strip-mining is related to some of those single issues people are focused on: healthcare, for example.

Leopold: The healthcare sector has three financial strip-mining operations: medical technology, pharmaceuticals, and insurance. Our per capita healthcare costs in the U.S. are more than double the highest costs in Europe. The reason for this is that so much wealth is being extracted by these three giant sectors of the healthcare industry. You might imagine that, since we’re paying twice as much for healthcare, our outcomes would be twice as good, but they are worse than the outcomes of nations that spend far less per capita.

Frisch: We’re not even comparing apples to apples, because some Americans don’t have any healthcare coverage or avoid going to the doctor because they can’t afford their high co-pays and deductibles. In those European countries, the whole population has comprehensive healthcare.

Leopold: Our healthcare system is designed to extract as much money as possible from sick people and put it into the hands of executives in the insurance, pharmaceutical, and medical-technology industries. With Medicaid and Medicare we have some protection for the poorest of the poor and the elderly, but the system sucks money out of the rest of us through deductibles, co-pays, premiums, and so on. The poor quality of our healthcare is a byproduct of this wealth extraction.

Frisch: How is Wall Street connected to the rise of mass incarceration?

Leopold: What we don’t see in our employment figures is all the people who have been absorbed by the penal system. In 1979 we had a couple of hundred thousand Americans in prison. Now we have more than 2 million. As runaway inequality took off, we created an unemployable underclass. There are no decent jobs for people at the bottom of the ladder. Most people who go to prison are poor. The average income of a man entering prison is something like $22,000 if he’s white and $17,500 if he’s black.

We have warehoused unemployed workers in prison, and it’s given us the largest prison population in the world, both per capita and in total numbers. That’s pretty astounding. And the growth of financial inequality and the growth of the prison population mirror one another: they both went up at the same rate after 1980.

Incarceration is becoming a profitable business. At this point only about 8 percent of all prisons are for-profit, but there are a lot of feeder industries that supply public prisons. To build new prisons, states sometimes borrow money from Wall Street, and the interest paid on those loans is another way to rob the public till.

Frisch: Is financial strip-mining colorblind, or does it reinforce racism?

Leopold: I think it’s both. It’s colorblind in that it will extract wealth from anyone, but because poor people are easy targets, and a disproportionate number of poor people are people of color, financial strip-mining is also racialized.

Predatory lenders go door-to-door in lower-middle-class black communities, looking for elderly homeowners. They try to move them from a safe, traditional mortgage to a risky, adjustable mortgage. They do this again and again, despite complaints to the Federal Reserve.

People who are fighting for racial justice can’t win without economic justice, and vice versa. The two have to come together, and that requires building a multiracial alliance. Reverend William Barber’s Moral Monday Movement in North Carolina is perhaps the best example of this. It’s very much aimed at racial and economic justice. We need that kind of movement across the country.

For me the foundational question is: Why does the richest country in the world have any poor people whatsoever?

Frisch: What do you think of President Trump’s plan for repairing the country’s aging infrastructure using public-private partnerships?

Leopold: Remember, that was a big plank of Hillary Clinton’s campaign platform, too. The idea was to transform the inner cities, the roads, the electrical grid, the water systems, and other crucial public assets by attracting private funds. It’s just another form of privatization. Of course, if this sort of infrastructure project were a prime profit-making opportunity, the private sector would already be there. Instead the government will likely offer public money like a bribe: “Set up a factory in the inner city, and we’ll guarantee your profits for a while.”

Frisch: One of the arguments for the partnership approach is that government has been cash-starved for so long.

Leopold: Here’s the privatization plan: First you starve a public entity so that it doesn’t run efficiently anymore. You cut the state’s Department of Motor Vehicles budget, say, to the point where the lines are long and it’s frustrating and the public hates going there. Then you sell the department to a private entrepreneur. You give them the public’s money and let them charge higher fees. It runs better than the decapitated service that was there before, but it also costs much more.

The Obama administration bought the budget-cutting argument and cut back federal employment. As a result, more public institutions are understaffed and not operating properly. Anytime something is understaffed, you can convince the taxpayer it will run better under private ownership.

Frisch: What about climate change? Is our slowness to roll back carbon emissions related to deregulation?

Leopold: Runaway inequality, financial strip-mining, and climate change are all deeply connected. You can see it in a corporation like General Motors. GM was a victim of the 2007–2008 financial crisis. The government bailed the carmaker out so that a million auto workers wouldn’t lose their jobs. We can argue about whether this was worth it or not, but there it is.

A businessman named Harry Wilson was on Obama’s auto-industry task force during the bailout. In making the deal, he learned a lot about GM. Then he left the Obama administration and set up a group of hedge funds, which bought $900 million worth of GM stock. When GM got on its feet again, the company gave its cash surplus to these hedge funds in the form of a $5 billion stock buyback. To me this is an utter betrayal. The American people more or less expected that if we bailed out GM, the automaker would use its profits to create more jobs, increase wages, and invest in research and development.

Environmentalists also thought GM would build the best green cars in the world, as a public service, since the public had helped it survive. But instead of that money going to control carbon emissions, it went to Wilson and his co-investors. This is happening everywhere.

The only way anybody can sell big industries on reducing emissions is by claiming that it’s actually more profitable. Some environmentalists are trying to make that argument, but I think it’s futile. We might be able to establish a market for carbon reduction, and maybe it would work. I’m agnostic about that. But if we don’t control financial strip-mining, corporations won’t have the cash to adhere to any emissions-reduction plan. Why would they want to? Instead they’ll organize to get rid of the new regulations. And all the Republicans and many of the Democrats will agree to it.

Once you have a deregulated financial sector, it becomes incredibly difficult for any government to pass regulations. With a flick of a computer key, a bank can move its money to another country. Billions of dollars can flee. If enough large financial entities do that, it forces the country to deregulate. Nobel laureate James Tobin said in the 1970s that a financial-transaction tax could slow down the departure of capital by making it more costly to move large amounts of money. He called it “throwing sand in the wheels” of global finance.

Frisch: I’ve heard of the Tobin tax, but I didn’t know its purpose.

Leopold: It’s not just to generate revenue; it’s also to slow down the pernicious flow of capital. If the big banks think a country is going to create a more robust social safety net and pay for it with taxes on the rich, swoosh, the money goes out of the country so rapidly that it destabilizes the economy and forces the politicians to give up trying to pass legislation on climate change or a living wage or much of anything else. That’s what deregulation means: no controls over the flow of capital.

Our economy does not work for all of us. It works for a small handful of elites who are extracting as much wealth from it as they can. They don’t care about the middle class. They don’t care about the number of homeless people. They don’t care about anything but their own bottom line.

Frisch: So it doesn’t matter what the public thinks about deregulation, because we don’t have the same power to take our money elsewhere?

Leopold: With both parties advocating for deregulation or public-private partnerships, the public is going to think those are our only options. We need to promote an alternative vision. People are ready for one. Occupy Wall Street was the first sign that Americans are pissed off about the way things are. Even if people don’t really understand financial strip-mining, they have seen its impact on their lives. They’ve seen their quality of life deteriorate. And they are responding to what Bernie Sanders and others are saying. The corporate Democrats are having a difficult time dealing with him and his supporters. They don’t know how to adjust to his anti–Wall Street message, because the goal of making as much money as possible has infiltrated the Democratic Party from top to bottom. How else could you explain that Hillary Clinton, who was already a millionaire, received $675,000 from Wall Street giant Goldman Sachs for just three speeches?

It may look as if there’s a big divide between Republicans and Democrats, but I have to smile to see New York senator Chuck Schumer portrayed as the leader of the “opposition.” He’s the senator from Wall Street. When the Democrats had control of the White House and both chambers of Congress, they couldn’t even get rid of the carried-interest loophole, which is a massive tax cut for the richest hedge-fund managers. It affects only a small number of people, but it’s billions of dollars in lost tax revenues, and the Democrats didn’t eliminate it.

Frisch: Republicans tell us that the U.S. has higher corporate taxes than any other country on the planet. Is this true?

Leopold: No. To understand corporate taxes, you’ve got to ignore the tax rate and look at what corporations actually pay. Because of financial strip-mining, many corporations are loaded up with debt and deduct the interest payments on that debt from their taxes. As a result, corporate contributions to taxes have been cut in half over the last thirty years.

Super-rich individuals also have the ability to move their money offshore and shelter it in myriad ways. The richer you are, the smaller the percentage of your income you actually pay in taxes. The poorer you are, the higher the percentage you pay.

The tax burden is falling mostly on middle-income people. They’re paying more and getting less in return. I was talking to a software salesperson from Finland recently. He’s paying 50 percent of his income in taxes, but he’s got universal healthcare, and his kids have free higher education, and they have incredible public transportation and other infrastructure. He feels he’s getting something for his tax dollars. Americans can’t say that.

Here in the richest country in the world, the standard of living for most people has gone down. Traffic is worse. Infrastructure is worse. Schools are worse. Your twenty-something son or daughter is still living at home.

Frisch: Why are you such a strong champion of public banks, like the one in North Dakota?

Leopold: Let me ask you this: When you pay your state and local taxes, where is the money deposited? I live in New Jersey, and I used to think it went to some vault in Trenton, the state capital. But no. In forty-nine states it goes to a Wall Street bank. They’re the only ones big enough to handle cash for a state. In the country as a whole, tens of billions of dollars in tax money goes into private banks. The only exception is North Dakota, where taxes provide the capital base for the state bank.

The Bank of North Dakota lost no money during the Great Recession, because it hadn’t bought any derivatives. Why? The bank president said, “I didn’t understand them, so we didn’t buy them.” [Laughter.] They’ve had the highest profit of any bank in the country for thirteen years running. The bank president makes about $330,000 a year, not $20 million, like the average Wall Street CEO. The Bank of North Dakota’s goal is not to generate money for investors (there are no private investors) but to provide financial services for the people of the state. North Dakota has one of the lowest unemployment rates in the country. At first people credited the oil boom, but now there’s an oil glut. Employment is high there because the public bank provides a financial infrastructure for the people and businesses of the state.

When state and local governments turn to Wall Street to finance their schools and bridges and so on, they get squeezed for funds. A study found that in 2014 the City of Los Angeles spent $334 million on banking fees — not principal or interest payments, but fees. That’s around twice as much as its entire budget for streets. A public bank can provide financing to state and municipal governments at very low interest rates. Some of these Wall Street loans are so rapacious that the taxpayer ends up paying four times the cost of whatever is built with the money.

I’m not saying nationalize the entire banking system. I’m saying give it some real competition. As you can imagine, private banks are trying to destroy this possibility.

Frisch: Who are you trying to reach with the Runaway Inequality campaign?

Leopold: We want to reach everyone, of course, but we have to target our efforts. One target is community groups. Another is the million-plus working people who supported Sanders and then threw their votes to Trump in protest. We work closely with the United Steelworkers, about half of whose voting members supported Trump.

Frisch: How do other social-justice campaigns feed into yours, and vice versa?

Leopold: Runawayinequality.org is an educational project, not an action campaign. We’re trying to help organizations deepen their alliances by showing them how their struggles are related to runaway inequality. For example, we did a workshop for union members and the Sierra Club in Martinez, California. This workshop took place at an oil-worker union hall. Before we started, I don’t think the relationship between the oil workers and the Sierra Club was very good. I would guess nearly all the Sierra Club members wanted to see the oil refineries shut down. But the union members and the environmentalists came to understand that they were both facing enormous difficulties due to runaway inequality, and perhaps they should try to join forces on that. They invited us back this fall to train union workers and environmentalists to lead runaway-inequality workshops together.

The public is really open to hearing about runaway inequality. We have unions and community groups lining up for our training sessions. I’m having trouble keeping up with all the speaking invitations I get. Either I miraculously morphed into a spellbinding orator overnight, or the timing is right for this.

Frisch: Some people would say that inequality is the price we have to pay for a capitalist system that values freedom.

Leopold: No, I don’t buy that. You don’t need runaway inequality to protect freedom. In fact, extreme inequality is leading to attacks on freedom and democracy in many nations.

I came of age in the 1960s, when capitalism was in fierce competition with state-run socialism all over the world. Nevertheless the public sector in this country was held in high esteem, and economic inequality was far more constrained than it is today.

What we have now is not your grandfather’s capitalism. There’s nothing inevitable about the shift that’s taken place. We could put a lid on financial strip-mining if we had the political will. Reversing runaway inequality is possible, provided we come out of our silos and build a common movement.