seen desperate republicans joining forces with him. >> republican presidential frontrunner mitt romney under fire from critics who claim he made millions while handing out pink slips. >> this is not about capitalism. >> anger rising over an economic system that has rewarded some but leaves many feeling left behind. >> this is the defining issue of our time. >> occupy wall street focused anger on the wealthiest americans. >> we got sold out. >> the tea party drove republicans to a 2010 midterm victory, warning that president obama would destroy capitalism as we know it. >> obama wants you to be a socialist. >> is capitalism working for most americans today? >> the basic bargain that made this country great has eroded. >> if you're rich, capitalism is probably working just fine. it's only broken if you're not. as you can see, the top 1%, that top line here, is doing pretty well, but what about everyone else? look at median income. that's the bottom line there. it shows that earnings for middle class americans have remained roughly flat since 1970 and even worse in the last decade, middle class incomes have actually dropped by 7%. i've got a panel here to discuss whether or not it's capitalism that's the problem. fareed zakaria the host of "fareed za car ra" and arianna huffington and mort zuckerman. editor and chief of u.s. news and world report. fareed, is american capitalism the problem here? is it broken? is it doing what we expected it to do? >> i don't think american capitalism is broken, but i think that there have been fundamental changes that have taken place over the last 20 years. if you look at the american economy over the last 20 years we have created net no new jobs in what is called the tradeable sector of the economy. the part of the economy that is subject to global competition. the only jobs we've created have been in health care, in government and in fields like construction, which are not really subject to outsourcing. you can't outsource the building of a new york skyscraper. something has happened and i think it's a combination of technology and globalization that is pressing down very hard on the average american worker. it becomes very difficult for him to find a way to raise his wages or her to raise her wages so that's real and i think it's a huge problem for an economic system which has been able to provide enormous rewards to capital corporations, but is finding it much more difficult to provide those rewards to workers. >> that's interesting. what you're talking about here is what we thought of as upward mobility. we think about it as capitalism and free enterprise, but really part of the american dream has been the ability to come here and leave this earth in a better socioeconomic position than you started, that upward mobility, that your work will be rewarded. >> absolutely. as an immigrant to this country, this accent is for real, i've lived the american dream. i remember growing up in athens and walking by a statue of president truman, who was revered because of the marshall plan, and there was a sense that you could move to america in search of a better life. that was always identified with america. and i think what happened goes even beyond technology and globalization. i think it's two things for me. the role of government in misallocating resources, because you have basically the role of money in politics, the role of lobbies, the role of influence has meant that we have so many rewards being given for the wrong reasons. whether you are -- whether it's sugar subsidies or whether it is the attempt as happened recently to regulate for profit colleges, which was undermind by for profit colleges spending $16 million to basically water down the regulations. again, education is at the heart of the american dream. if you can't go to a good school and if you can't afford to go to college, that's a central undermining of the dream. >> let's take a look at this pew study. pew survey found 46% of americans believe most rich people are wealthy because they came from wealth. they came from a wealthy family or they have great family connections. so that's 46%. 43% believe people become rich primarily as a result of their own hard work and education. so americans are roughly divided on whether making money in this country is as a result of hard work. this is at the core of some of the debate that we're having right now. you hear a lot of the republican candidates saying that democrats are not rewarding work. this issue of whether work pays is central to whether capitalism works. >> let me just say i really support what arianna just described. i think there are huge problems in this country and a lot of it stems not from capitalism but from the government. i'll focus on the first one, which is we have done a terrible job in providing enough education for the children of this country. there's a whole mismatch in terms of the number of people coming out looking for jobs and the qualifications that people need for jobs, particularly those who are educated, particularly in the world of science and technology. there are shortages of people, there are literally millions of open jobs because we don't train -- >> but why does the free market not solve that market? problem? >> because the education is a government function. if there ever was a public function in this country from the days it started, it's public education and we've done a lousy job. part of it is frankly because we have lousy teachers. part of the reason we have lousy teachers is we have teachers unions that won't deal with those issues. so there are lots of reasons why education is not being properly handled in this country. to me if i could think of one thing that would change it, it would be to change our system of education and make sure that our children were properly educated. >> let's go full circle because i know you've talked about this, fareed. this idea if we're educating properly it should lead to a less -- we have a mismatch. let's say we have 15 or 16 million people unemployed. we have probably 3 million job openings in the united states and we've had that consistently for some period because the people with the 3 million job openings say we can't find the talent to fill it and the 16 million looking for jobs don't have the skills to fill the 3 million. we have a mismatch. >> the 3 million job openings are slightly deceptive because there's always a process of jobs being available that people aren't filling. i think i want to go to the central point you were asking, which is -- and what mort was talking about, the role of government. i think it's very important to understand there is no such thing as just capitalism and socialism. there are varieties of capitalism and the crucial question is are we providing the kind of investment in human capital and physical capital that are going to make it possible for broad-based economic growth, or are we instead subsidizing a bunch of industries here. that to me is the crucial issue. we have to find a way to get the role of government to be pro-growth, pro middle class and we're not doing that right now because of lobbies and frankly the american public want very large and lavish subsidies for the health care. they don't want to invest in science and technology in education. even things like infrastructure are much less popular than expenditures that are consumption, medicare, medicaid, things like that. so i think the crucial pointing is not -- you can't cut your way to a new generation of prosperity. people who think you can have austerity and budget balancing are crazy. you need an active, energetic government, but it's got to do the right things. >> so the role of government in providing the ability for the individuals to change their situation, to improve their economic situation is central. i want to hold on that a moment because we've got a good, robust conversation here, but part of our deal is we actually have to pay the bills too. the land of opportunity no matter where you come from is the united states. it is what it was built on. do americans still have the upper hand in their own future or do europeans and canadians actually have a better chance to move up the economic ladder than americans? we're going to talk about moving up that economic ladder, upward mobility and you, next on "your money." people with a machine. what ? customers didn't like it. so why do banks do it ? hello ? hello ?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello ? ally bank. no nonsense. just people sense. all right. there are euphemisms we use such as the american dream or the american way of life, but perhaps none more important than the land of opportunity. it means no matter where you started, there is an opportunity for you to improve your lot in life if you work hard enough. mitt romney spent the week driving home the point that nowhere else in the world is there a system working better than the one in the u.s. right now. >> the obama administration is going to work very hard to put free enterprise on trial. but you know what, it works. look around the world and you'll see nations that are trying other models that haven't worked and they're coming back to free enterprise and capitalism. >> recent studies have concluded that your ability to move up the ladder is actually better in many other industrialized nations. a look at parents' incomes as a predictor of children's incomes shows that you have a better chance of changing your economic status if you're born in denmark, norway, finland, canada, sweden, germany or france than if you were born in the united states. mort zuckerman, these studies are saying you have less mobility and less upward and social economic mobility in the u.s. than you do in other countries which we wouldn't hold up as the ultimate examples of a free market. they're modified free markets. >> i have to say those numbers leave a lot out in terms of what makes for mobility, okay. one of the things we were talking about before was education. we have a much poorer educational system than a lot of these other countries. we have a whole different racial makeup in this country, which frankly makes it more difficult for african-american children and hispanics who are immigrants. we have a much larger immigrant population. in fact if i may point out, all four of us are immigrants and, frankly, there is no country that comes even close in my judgment to offering the kind of opportunity and mobility that the united states offers. it's not even close and i've looked at a number of these countries. >> even in canada where you're from. >> absolutely. canada now has a much better government, a much more intelligent and much more serious government. they have avoided a lot of the economic crises and financial crises than we have because they've much more intelligent policies of making their banking and home mortgage systems. they bring in a lot of immigrants who are qualified and let them stay. >> as an immigrant myself, i feel my heart is with you, but i've looked at these studies and the data is overwhelming. we are actually at the bottom of the industrialized world in terms of social mobility right now and it's for the reasons you are describing. imagine a poor child in the united states. that child is going to have very bad malnutrition problems because we have no programs to deal with those kinds of things. that child is going to get a terrible education. that child is not going to be able to find ways to get into elite colleges, which are now fabulously expensive. so there are so many areas where countries, particularly in northern europe, focus on early childhood nutrition programs, our kids by 16 if they're very poor, they're just massively disadvantaged. >> but here, even when you graduate from college in 2011, the average student graduated with $27,000 in debt. so you start life burdened with debt. but i think there's a more fundamental problem. this is a double standard in so many areas of our life, the coupling of risk and reward, which we saw in the bailout of wall street without any strings attached, which is exactly contrary to private enterprise. i mean adam smith and alfred marshall and the people when i started economics a thousand years ago would actually have seen that as a complete attack on private enterprise -- >> because the risk is eliminated. >> it's the whole thing of socializing risk and privatizing gain, which is incredibly dangerous. and the other element here is that even with all the rhetoric that president obama is using, the truth is he has not ended too big to fail, he has not reinstated the abolition of -- glass degreele having been instrumental in the financial crisis so you can use that rhetoric but what has fundamentally changed to make our capitalist system work for the sake of everyone. one more thing which really troubles me, which is the fact that when citigroup and bank of america are caught defrauding the consumer through, for example, packaging toxic securities and then shorting against them, what happens is that the s.e.c. gives them a fine but they don't have to admit wrongdoing. that has to change. >> and that is changing, by the way. they are saying that they're going to have to -- >> they are conducting a crusade against it, but why is this happening. >> you have been very vocal about what this administration has done in terms of poisoning the well for businesses, for people with money, people like yourself who would like to invest or should be doing things to create jobs in this country. what should they be doing to fix capitalism? what's the government's role? >> the first thing that i would do is i would transform the income tax code and take away all the special privilege that a lot of these people who don't deserve special privileges have managed to embed in the tax code. i would widen the base and lower rates for everybody. we need that on two levels. a, it's fairer, so that the special interests do not benefit from it. b, it would stimulate the economy, which we surely need now. that's one of the things that i feel very strongly about that we should have done. i'll give you a second thing that we could have done. well, i don't want to go into everything that the obama administration could have done, we don't have enough time for that, but i do think we are in a situation where it's not so much the capitalist system, it is what fareed was suggesting. our government has failed. in part it's because in a sense the government is being bribed, legally bribed but being bribed in so many ways. nobody seems to have had the courage to get up there and say this is what we need to do. i think if we found a leader like that, some of us thought obama would be that person, he has not been, i think it would transform the country and make it fair and open up opportunity. but we are going to still have fundamental issues here because we have a very different population makeup and we have a much larger immigrant population here, which is a much more difficult thing to absorb. very different than europe, frankly. i just think we have an open society in some ways, but we have really closed the door in other ways. >> so we have a blank canvas. let's assume that we are admitting that capitalism is not terrible, in and of itself it is not the problem, it's the way it is being executed and the role of government. i'm going to take a break here. when we come back, if capitalism isn't broken, what do we have to do to make it work better. our guests might surprise you with the best solutions they have heard coming up next on "your money." vegetables. over twenty delicious varieties have sixty calories or less per serving and are now weight watchers-endorsed. try green giant frozen vegetables with sauce. all your important legal matters in just minutes. now it's 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[ male announcer ] one pill a day. 24 hours. zero heartburn. solutions to problems can come from surprising places. our guests, this amazing panel, has access to an amazing array of influential folks from world leaders to ceos, but maybe the answer to what ails america's economy is as simple as something they once read in a fortune cookie. i've asked each of them what the solution, the best solution they have ever heard is for fixing america's economic problems. if capitalism is on trial here in america, let's call this the verdict. let's start with you, mort. what's the best idea or set of ideas you've heard to fix our economic ills? >> i would stop eating fortune cookies and assume that you can learn anything from them. look, my own view is that if there's one single thing that has to be done in this country, it is to transform the system of education. if you don't prepare this country for a world in which education and technology is going to be enormously predominant and which we're not going to be able to compete either in agriculture or indeed in blue collar work, okay, industrial work in other words with the rest of the world, there are areas where we can compete and we have to train people. if we have 3 million jobs today that are available to people who if they had the education and the skills and technology they would be able to have that kind of a future. this to me is the single most important thing in this country. i've always believed it. not just elementary education and high school education but making college education affordable to everybody. one way or another to me, that is the single most important thing i could recommend. it's not a quick-acting solution. >> but it's necessary. >> if we don't prepare our children for the future that they are going to be facing, which is going to be even more driven by what you have with education and understanding technology, they're going to be even more irrelevant. >> it's a little unsexy for a campaign, but it's very, very important. it's crucial and i agree with you. >> every family knows that's true of their children, that they have to have better education and they know what's wrong with the education system and yet we still cannot seem to do it. >> arianna. >> i'm going to look for solutions, a businessman, james stangel, whose new book, he was the marketing head of procter & gamble and he's written this marvelous book about the need for businesses to align their bottom line with the social impact they're having and their values. roger martin, professor at the university of toronto, his book "fixing the game" is about how our shareholder value theory has put traders rather than customers at the center of business decisions. we need to change that. and judge rakeoff because he has the gumption to say -- that the way we hold corporations accountable has to end. >> excellent suggestions. i would recommend in addition to the judge ruling, james stengle and roger martin, how we change how we're oriented to make money in this country. fareed. >> i think there's no easy fix. i look at history and i look at the asian countries and what you see in every country that has been able to sustain growth, broad-based growth, it is based on investment. our economy has become one that is based overly on consumption, and what we have to do is to change that. we have to move towards greater investments, investments in human capital, education, but also investments in physical capital. we have a crumbling infrastructure, we have a bad digital infrastructure, we're behind the rest of the world in almost all these crucial areas. and yet,