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JENNIFER LUDDEN, host:

This is TALK OF THE NATION. I'm Jennifer Ludden, in Washington. Neal Conan is away.

When Arianna Huffington immigrated to the U.S. in 1980, she says she knew there was no other place she'd rather live. Thirty years later, she says that's still true, but Huffington also feels the American dream is under serious threat -high unemployment and debt, mounting foreclosures, a crumbling infrastructure, a financial system skewed in favor of the elite, a political system too broken to do anything about it. And squeezed by all this: a disappearing middle class.

What's at stake? Well, the title of Huffington's new book is "Third World America: How Our Politicians are Abandoning the Middle Class and Betraying the American Dream."

Later in the hour: Yes, ma'am. We'll talk about the politics of polite.

But first, "Third World America." Is your town slipping into shambles? Are we slipping as a nation? Or tell us what is working where you live. Our number here in Washington is 800-989-8255. Or you can email us at talk@npr.org. And you can join the conversation at our website. Go to npr.org and click on TALK OF THE NATION.

Arianna Huffington is cofounder and editor-in-chief of the liberal website The Huffington Post, and co-host of the public radio program "Left, Right and Center." She joins us from NPR's New York bureau.

And welcome to you.

Ms. ARIANNA HUFFINGTON (Political Commentator, Author): Thank you, Jennifer.

LUDDEN: So let me ask you first - throw out a general question here. Who's killing the American dream?

Ms. HUFFINGTON: Well, it's taken a while. You know, it didn't happen overnight. It's been going on over the last 30 years. And it didn't just happen by accident. There've been many tricks and traps - as Elizabeth Warren calls them - hidden in the mortgages offered to the middle class, in the credit card contracts, in all the promises that, without any money down, without any proof of income, you can somehow buy into the American dream.

And there is no question that the special interests that fund our politicians and drive so much of our politics in Washington have had a big role to play.

LUDDEN: And you say that kind of the upshot of this is that, you know, this tradition of upward mobility is no longer something that Americans can count on.

Ms. HUFFINGTON: Exactly. And that's really always been at the heart of the American dream: upward mobility. I know as a Greek immigrant of this country, growing up in Athens and knowing a lot of people who were coming to America in pursuit of a better life, that was really the term that I associated with America.

And I came myself here in 1980. And I lived the American dream. And that's why, as things began to fall apart, and as more and more people - people with college degrees, people with good jobs - started losing their jobs and not knowing when they were going to get them back, if ever, when friends of mine who had kids graduating from college were talking about how these kids could not get jobs - plus, of course, all the stories and all the data we have about blue collar workers, workers were losing manufacturing jobs that were never returning, it was clear that there was a perfect storm of suffering, and that despite all that, despite the fact that during the campaign then-Senator Obama had said that the middle class was the North Star, was the term that David Plouffe, his then campaign manager - used of his campaign. The middle class was not at the center of what we were doing since the financial meltdown. Far, far from it.

LUDDEN: And let's just be clear here. I mean, obviously, there were so many problems brought on by this horrific recession that we have recently had. But you're talking about trends that go beyond that. Is that right?

Ms. HUFFINGTON: Absolutely. Yes. What happened is that the recession brought everything to a head. And now we have no more reserves to fall back on. And it's clear that the unemployment that we're dealing with - 26 million people out of work or underemployed or too discouraged to look for work - is something long-lasting.

You know, one of the things that has happened, Jennifer, in the last three weeks, really, is that we have a new level of reality about what's happening.

LUDDEN: In the last three weeks, you say?

Ms. HUFFINGTON: Yeah.

LUDDEN: OK.

Ms. HUFFINGTON: If you and I were having this conversation even a month ago, before the GDP numbers were recalculated downward, before the latest jobless numbers of last Friday, before the latest news that your news announcer just read about slower growth spreading to multiple states, you know, we would be having a different conversation.

I would be trying much harder to convince you that we are on a trajectory towards a Third World America, because the talk was still of recovery, of green shoots, of unemployment being a lagging indicator. How many times haven't you heard that? Oh, yeah, sure, unemployment isn't up yet, but we're recovering. It's just that it takes a little longer for the jobs to come back.

Well now, at least we know better. And there's a new kind of sense of reality that has crept in, which is definitely good news if we're going to course-correct in time.

LUDDEN: You mean, just to be aware of?

Ms. HUFFINGTON: Yes, exactly. Just to know a bad thing is the first step towards...

LUDDEN: It's good to know all the bad stuff.

Ms. HUFFINGTON: Well, otherwise, you know, we won't have the sense of urgency that we need to have about course-correcting.

LUDDEN: All right. Well, let's - we've got a lot of callers already on the line. Let's listen now for Chris in Modesto, California.

Hi, Chris.

CHRIS (Caller): Hi, it's a pleasure to speak to both of you. And I agree with you exactly, Ms. Huffington. There is this idea that this sort of economic malaise has set in. And to give you a brief context, my wife and I live in Modesto, California, the heart of the foreclosure problems in California and in the U.S. - a lot of bad problems. Our city, for five years on, has been voted one of the worst five cities to live in in the U.S.

And so my wife and I have sort of been trying to - you know, we see how news media sort of crowd-source ideas and sort of leverage, you know, sort of the public. We've worked on creating an alternate reality game. My wife teaches at Cal State here. And basically, it's an alternate world where we imagine what would make our city better to be living in, to be working in, to have a greater sense of community despite everything that's going on, and the idea that hopefully what people bring to the table virtually in this alternate reality game we can then translate into something in the real world.

And we've already started grouping with local interfaith groups that do things to raise awareness of our city. But I think for us, it's sort of this - like a virtual grassroots is sort of where we're looking at to turn things around in our city.

LUDDEN: Huh.

Ms. HUFFINGTON: And what are some of the ideas that people have been proposing?

CHRIS: Well, people have looked at sort of the idea of the - we have lots of colleges here. We have Modesto Junior College, Cal State University Stanislaus all within about 30 miles of each other, and basically, really tapping into where the population where we know uses alternate reality games or is at least aware of it, and kind of based on the idea of Jane McGonigal's "A World Without Oil," which is an alternate reality game sort of taking on a worldview of imagining a world without oil and how people would come up with solutions.

So we're seeing a lot from college-aged kids about raising awareness of more things going on in the city, how we used to be in the '50s and '60s, a pretty hotbed for modernist architecture in the United States, featured on the cover of Newsweek magazine, I believe, sometime in the '60s. And sort of raising an awareness of where our history is from.

You know, George Lucas, "American Graffiti," the whole - really looking at a holistic thing and seeing what people can do to sort of get that excitement going again today. Because, I mean, you know, we have high unemployment rate, poor education rates relative to other counties in California.

So, you know, being aware of the grim reality of that, hopefully we're trying to get people interested in coming up with ideas to spark creativity that could, you know, make a change.

LUDDEN: Chris, thank you so much for that call.

Arianna, you're actually calling for a grassroots, kind of an outsourcing solution as well, right?

Ms. HUFFINGTON: I know. This is fantastic. In fact, Chris kind of went straight to Section Five of my book, which I love because that's my favorite section to talk about because it's the section of solutions.

And really, he captured the spirit of the solution section, which is American innovation, the American can-do spirit.

I mean, who would have thought of crowd-sourcing and alternate reality? Well, Chris did in Modesto, California, and his friends are participating. So we have this incredible history, as he kind of implied, an unparalleled track record for marshalling our forces and rising to meet great challenges, which you also have to do.

And I really feel very optimistic that it's going to happen all across America at the grassroots level. I have to be honest with you, Jennifer, I'm much less optimistic it's going to happen from Washington, but I feel that it's happening already across the country.

LUDDEN: Let's get a few emails in here. Catherine(ph) has written from Michigan. She says: My husband came to this country in 1969 knowing no English and with less than a high school education. He found factory work in a week. He found a unionized job with insurance in two years. He found a skilled unionized job with a major city here in Michigan in seven years.

He earned a college degree and maintained our family always with superb health insurance. Our two sons, both educated, have never had the opportunities their immigrant father had in 1969. They work sporadically and have never had health insurance since aging out of their policies. This is America. Maybe they should be emigrating to somewhere else.

Then a little more optimistic email from Jed(ph) in Newburg, North Carolina: All of my friends make far less than $250,000 per year, and we are all as well or better off than we were five or six years ago. Defining middle class is a tricky thing. She wants to know: How does Ms. Huffington define it?

Ms. HUFFINGTON: Well, in the book, I use a lot of surveys, including the Pew surveys about how to define the middle class. But in the end, most surveys agree that it depends on how people define themselves. It's not just about income.

LUDDEN: But doesn't everyone say they're middle-class?

Ms. HUFFINGTON: Well, yeah, if they feel that they have a sense of basic financial security. That's what it comes down to. You can be a blue-collar worker who is not worried about how to make ends meet, and you are middle class. You can be college-educated and have a better-paying job, but if you are worried that this job is going to disappear or that suddenly you're going to be asked to take a pay cut, then you have a very precarious middle-class existence.

So a lot of it depends on that sense of financial security, and one of the problems we are seeing now is that increasingly, staying in the middle class, let alone aspiring to become middle class, is becoming a game of chance. It's as though you are buying a lottery ticket, and maybe you will, and maybe you won't. But there isn't a clear trajectory to get into the middle class and to stay there, and...

LUDDEN: And do we hear that this is the first generation where children may not do as better as their parents?

Ms. HUFFINGTON: Exactly, and we had polls that came out yesterday that made that clear, two-thirds of people who expect their children to do worse than they're doing.

LUDDEN: Arianna Huffington is our guest. Her book is called "Third World America." We'll talk more about the arguments she brings up in a moment, and we'd like to hear from you. Do you see these problems playing out where you live? Is your town slipping into shambles? Are we slipping as a nation? Or tell us what's working.

Our number here in Washington is 800-989-8255. Our email address is talk@npr.org. I'm Jennifer Ludden, it's TALK OF THE NATION from NPR News.

(Soundbite of music)

LUDDEN: This is TALK OF THE NATION from NPR News. Im Jennifer Ludden.

We're talking with Arianna Huffington. She's co-creator of the Huffington Post and co-host of "Left, Right and Center" on public radio and now the author of the new book "Third World America."

It's a title, she explains in the book, that's meant to be a warning of a looming American nightmare. To get a full picture of where she believes the country went wrong, you can read an excerpt at our website. Go to npr.org, and click on TALK OF THE NATION.

We also want to hear from you. Is your town slipping into shambles? Are we slipping as a nation? Or what is working where you live? Our number here in Washington is 800-989-8255. Our email address is talk@npr.org. And you can join the conversation at our website. Go to npr.org, and click on TALK OF THE NATION.

And we have a lot of calls, so let's go right to one of them. Alan(ph) is in Fairfield. Is that Iowa?

ALAN (Caller): I'd like to talk about something that's working where I live.

LUDDEN: Please, that'd be wonderful.

ALAN: This is the home of the Maharishi University of Management, and it happens that because the university is here, a lot of people from other places, such as myself from Washington, D.C., and people from California and all over the country, have come here because it is so much more pleasant to be in a town where about 25 percent of the people are meditators and have some kind of spiritual orientation.

In other words, just because one practices transcendental meditation does not mean one has the same belief as other people who do the same practice. It's a pretty diverse group.

But the atmosphere when you, you know, come into the town, it feels great. The town has a very spiffy look to it, with, you know, lots of improvements to the downtown and a cultural and convention center, the whole thing.

So I'm not saying that Fairfield is without problems, but the streets are getting, you know, fixed up real nicely, and, you know, in general I would say it's still a great place to live.

Now, the understanding of that that I would like people to get from having heard my call in here is that everyone has an infinite amount of whatever it takes deep inside them, and what meditation does is it's kind of like a well that brings it up to the surface and makes it available. That's all.

LUDDEN: All right, Alan, thank you so much.

ALAN: You're welcome.

LUDDEN: Let's get a little different viewpoint here before coming back to you, Arianna. We've got Ben(ph) in Middletown, Ohio. Go ahead, Ben.

BEN (Caller): Yes, I would like to comment on the town that I grew up in, Middletown, Ohio. And it's went from being a really nice place to live to almost like a ghetto. It's just unbelievable the amount of homes that are empty and boarded up, and it looks like it's a war zone in some areas.

I mean, it's - I've never seen anything like it.

LUDDEN: Is that since the recession, this is a longer-term trend?

BEN: No, it's a little bit of a longer-term trend but way more since the recession. And it also, you know, the amount of Section 8 housing and a lot of poverty. And there's like, we have a newspaper with about six jobs in it. I mean, that's about it.

LUDDEN: Yeah, media's in its own little tumult here. Was it loss of some jobs? Do you know what happened? Did some factory shut down?

BEN: Right. It's just, I can't comment on that. A lot of the factories shut down and went overseas, and it just, you know, a GM plant in Dayton shut down, and, you know, it just - it's just, it's pretty ugly.

LUDDEN: All right, well, thanks for calling. Arianna, two different stories there.

Ms. HUFFINGTON: Yes, and both of them have a lot of truth in them. You know, you - I traveled around America in the course of writing the book, and there are parts, probably like Middletown, Ohio, where I haven't been, but other parts that I went to in Michigan, around Detroit, for example, that give you the feeling that you are in a third-world country, exactly the feeling that the caller described.

And at the same time, when we look at how do we turn things around, we need to start with ourselves. I mean, I think what the caller who meditates said, whether you meditate or not, has a profound truth to it, which is that we all have this inner strength. How do we tap into it?

And if you go to the section I've created on The Huffington Post, huffingtonpost.com/thirdworldamerica, the first step that we recommend for people who want to turn things around is to tap into their own resilience, whatever it takes, because some people will survive these hard economic times and emerge stronger, and some people will be crushed by them. And the key difference here is how to respond to them.

LUDDEN: Now, you also have a list of things people can do to, you know, take some kind of action, when you feel that Congress just is not going to. And one of the efforts you have going is to get people to take their money out of the big banks and put them into smaller community banks. Tell us about that, and how is it going?

Ms. HUFFINGTON: Yes, what happened is that around Christmas, I was having dinner with some friends, and we were railing at the big banks that were bailed out by the taxpayer and then instead of returning the favor, cut down lending. Over $100 billion less has been lent to different businesses, especially small businesses creating jobs.

And so instead of complaining and being angry, we decided to encourage people to move their money. So I have a whole section in the book about moving your money from a big bank to a community bank, a credit union.

We have a tool on the moveyourmoney.info site that actually looks at the different banks in your area, once you put your zip code in, and tells you which are the most credit-worthy banks.

In fact, as you know, any deposits up to $250,000 are guaranteed, whether they're in a credit union, in a community bank or in a big bank, and...

LUDDEN: And do you see this as self-protection or a way of punishment?

Ms. HUFFINGTON: No, you know, I see it as both self-protection, because you are less likely to have all the hidden fees, especially hidden overdraft fees that you are likely to get from depositing your money with big banks. But also, you are much more likely to invest your money in banks that are likely to invest back in the community, and that's very important.

As we make decisions, we need to support institutions that are going to support our communities. And also, and that's perhaps going back to our inner strength, we have discovered from the comments we've been getting from people who have moved their money, and over two million have, that it gives them a sense of empowerment.

Instead of feeling depressed, as one commenter put it, and having lost her job, she couldn't get out of bed, she felt that somehow she was more in control of her own destiny, that she could make an important financial decision.

And now this has spread, Jennifer, beyond individuals, to cities and states and pension funds. We have a lot of ability to turn things around if we actually begin to act.

LUDDEN: Let me read a couple of emails here. Wendy(ph) in Oakland, California, writes: I'm 40 years old with two college degrees and plan to finish my master's in science this winter. I've never had a stable job. I technically have never worked full-time.

I've never had a paid vacation or sick day in my life. I've never had health insurance since I graduated college. I have had to declare bankruptcy, been evicted due to landlord foreclosures every year for the past six years and have yet to pay off student loans. What American dream?

And then Johnny(ph) in Cincinnati writes in: The middle class going down a few rungs on the mobility ladder is bad enough. The real danger is what happens to the new poor.

As entitlements are cut and the poor are less able to compete in the drastically changing workforce for a variety of reasons, a perfect storm is brewing. This scenario is the stuff of revolutions.

That's strong words. Arianna?

Ms. HUFFINGTON: Well, strong words, but if you look at the anger that's spreading around the country, Jennifer, the anger, in fact, that has given birth to the Tea Party movement, at the heart of the Tea Party movement, is the anger at the unfairness of what government did with the bailout.

You know, that anger has been exploited by many demagogues and has been turned to an attack on Obama or health care, but at the heart of it is that sense of unfairness.

LUDDEN: You've actually written that we should have let the big banks fail.

Ms. HUFFINGTON: Well, either let them fail or make sure they survive, but with major strings attached. You know, making sure, for example, that there were going to be clawbacks, that the people who wrecked the economy were not going to be able to walk away scot-free and with big bonuses; that there would be no big bonuses, that they would have to lend back to the community.

If we were going to bail them back, we had to bail them back with huge conditions. I mean, remember, even out of the money, for example, gave AIG $180 billion, $14 billion went to Goldman Sachs, 100 cents to the dollar.

Now, even if people may not know all these details, there is a general sense that the game was rigged, that this is not really a private enterprise system that's functioning by capitalist rules, that if you take an excessive risk and you made mistakes, you just fail and go bankrupt. This is a kind of financial oligarchy that's rigged the system and is getting away with massive risks that, then, the taxpayer has to bear.

LUDDEN: Okay, let's take another call. Ana(ph) is in Amesville, Ohio. Hi, Ana.

ANA: Hi. Arianna, I so appreciate your views and your website. And I agree with everything you're saying about access to quality jobs, health care, education and then Wall Street's, you know, getting away with privatizing their profits and socializing their losses.

But I want to ask you about this concept that we've all been brought up with, with upwardly mobile, and how our being upwardly mobile has affected the rest of the planet. And where you - do you deal with that in your book, like in regard to, like, we're 4 percent of the world population using up 30 percent of the resources? How do you deal with that upwardly mobile idea in a fair way to the rest of the world?

Ms. HUFFINGTON: Thank you. That's a very good question. I definitely deal with the fact that, as the Chinese say, a crisis is also an opportunity. And we have an opportunity now to look at our values. And look at what have we made a priority. And, definitely, the fact that our economy has been driven by consumption and the fact that somehow we came to believe that consumption was the way to happiness, it needs to be reevaluated, both because it's not true and it hasn't worked.

And also because, right now, and for the foreseeable future, consumption at the level at which people were consuming in America is not going to be available to us. Remember even after 9/11 when the country was really ready to come together and do something different and really solve some big problems together, President Bush encouraged us to all go shopping. That is all changing.

LUDDEN: All right. Ana, thanks for that phone call. Let's hear now from Joshua(ph) in Fayetteville, Arkansas.

JOSHUA (Caller): Yes, hello. I just wanted to, you know, bring up a point about how education really plays into this and, you know, the economy as a whole. It seems like - you know, we've always pushed this idea of the American dream and everything, but it seems like we forget to push that, you know, you have to work for that. It's not just something that gets handed to you. And, you know, you made the point of where we've kind of grown up in a society of spend, spend, spend and consume and consume, and it seems like people don't really stop to think, you know, if we're not making stuff, if we're not, you know, improving ourselves, we're not going to improve (technical difficulty), stuff just kind of stay stagnant.

And it seems like we don't push, you know, education enough. And not just - you know, I'm not just talking about college. But, you know, things like trade schools or even, you know, being like in apprenticeships. It seems like we get this idea that, you know, if you get through your high school, then you're done and you can go in and get a job. And, you know, it's really a bigger thing of our entire society changing is to where, you know, the workforce now needs to be much more talented and much more skilled. And it seems like a lot of people have kind of forgotten.

That's really the point that I wanted to make. So (technical difficulty) realize that, in turn, we'll push the economy into a better way, you know, overall.

LUDDEN: All right. Joshua, thank you for that. Arianna, before you respond, let me just remind people that you're listening to TALK OF THE NATION from NPR News.

Arianna, our education system, that's another thing you say needs reforming.

Ms. HUFFINGTON: Yes. In the section that I have on our infrastructure, as well as talking about our collapsing dams and bridges and our aging infrastructure all around the country, I talk about our education system, which is failing our children.

And I talk about a great new documentary that's coming out at the end of the month, "Waiting for Superman" by Davis Guggenheim who also directed "An Inconvenient Truth." And what is powerful about that documentary is it shows how we have failed our children and how by giving tenure even to the worst teachers we have made it much harder, especially in poor neighborhoods, to provide the kind of teaching that's essential for getting people out of the stagnation they're in. And Geoffrey Canada, who is here in New York where I'm at the moment, working tirelessly in Harlem to lift kids up, is providing a thread throughout the documentary about what needs to be done.

We are not just falling behind so many other countries. We are actually, again, betraying the American dream, and in this case literally. So many public school kids have to take - have to become part of a lottery to see if they're going to be lucky enough to be able to go a good charter school.

LUDDEN: Hmm. Let's take one more call. We have Melissa(ph) in Columbus, Ohio.

MELISSA (Caller): Good afternoon. One of the things that it sounds like you're talking about in your book is how we have to, as individuals, take responsibility. And I think one of the things we have to stop doing is putting politicians in one box and putting the people in another box. Politicians are people. And I think they have to be accountable for the type of decisions that they've made.

And, honestly, I consider myself a Democrat, but I am very frustrated with the political system in general. That doesn't mean I'm not active in the political process, but I'm just tired of the infighting. The infighting does not bring about solutions. And I just think we need to remember politicians are people and they need to be held accountable. And that's my comment.

LUDDEN: Thank you, Melissa. Arianna?

Ms. HUFFINGTON: Well, they definitely need to be held accountable and that's what I'm trying to do in the book, and holding accountable politicians of both parties. That's incredibly important right now. As we need solutions that I call in the book going beyond left and right, you know, we in the media are sometimes reflexively looking at every problem as having a left and a right. And yet a lot of the problems I'm addressing here have solutions that are beyond left and right. I mean, who doesn't want a thriving middle class? I mean, even if you are one of the one percent lucky enough to be making all the money you want, if the middle class disappears in this country and we do become a third-world country, who wants to live behind gates with your kids, you know, surrounded by security guards who protect them from kidnapping?

LUDDEN: You know, we have just one minute left, but I wanted to ask you something you mentioned is that in all the things that happened - the recession, the housing bust, U.S. invasion of Iraq - a lot of, you know, bad outcomes are predicted but we don't pay attention to them. We always, as a nation, kind of focus on the optimistic scenario. Why do you think that is?

Ms. HUFFINGTON: Well, first of all, that's part of the American spirit that I love. But that actually sums up why I call the book "Third World America," why I felt that it was important to issue a real warning, and yet why, in the end, I end on an optimistic note because of all the great examples of resilience, compassion and giving back that I found during my research around the country.

LUDDEN: Well, thank you so much. Arianna Huffington's new book is "Third World America." To read an excerpt, go to npr.org and click on TALK OF THE NATION. She joined us from our New York bureau. Thank you.

Ms. HUFFINGTON: Thank you very much.

LUDDEN: Coming up, don't call me ma'am, the politics of polite. I'm Jennifer Ludden. It's TALK OF THE NATION from NPR News.

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