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CNN IN THE MONEY
Advertisers Target Reality Television; New Food Pyramid: Better For Consumers or Food Companies?
Aired April 24, 2005 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: From New York City, America's financial capital, this is IN THE MONEY.
JACK CAFFERTY, HOST: Welcome to the program. I'm Jack Cafferty. Coming up on today's edition of IN THE MONEY:
Trimming the fat of the land: Washington's new food pyramid supposed to get America eating better, see if it works better for consumers or perhaps the food companies.
Also ahead, maybe they should call it a docu-commercial: Even reality TV has product placement, these days. See why the ad people are trying to slip a sales pitch right into the middle of your favorite TV show.
And, shrinking the planet: Globalization busting down national boundaries, blowing markets wide open. We'll talk with a Pulitzer Prize winning Op-Ed columnist for the "New York Times," Thomas Friedman, about the world being flat and what it means to all of us.
Joining me today, a couple of IN THE MONEY veterans, CNN correspondent, Susan Lisovicz; "Fortune" magazine editor at large Andy Serwer.
Very interesting poll done by the "Washington Post" and "ABC News," last week, where 48 percent of the people in this country now think that our economy is getting worse. There are some signs around, interest rates going up, there's some statistics out on the housing market that weren't very encouraging, little hints of inflation here and there. How concerned, I wonder, should we be with the idea that half of the population thinks it is not a good time?
ANDY SERWER, "FORTUNE" MAGAZINE: Half of the population thinks the glass is half full is what we're talking about here. I think a really big factor is gas prices, I mean, that is so important for so many Americans and we know that they're spending hundreds of dollars more on gasoline this year than they were last year. That bites right into their pocket it is a tax. It also hurts businesses and perhaps causing them not to hire as many people, so you know, that's the real negative side. It's probably isn't as bad as people think it is, you know, because if you look at historical gas prices, and we know they were higher back in 1980, still that doesn't make it any easier. SUZAN LISOVICZ, CNN CORRESPONDENT: We've seen anecdotal signs that it's starting -- the high oil prices -- record high oil prices were crimping into retail spending, but I think one of the things that really shook Wall Street a few days ago was consumer prices, because when you stripped out energy, you saw the biggest increase in several years, so you're really seeing signs now that it's being passed along to other areas. On an anecdotal note, we also got a note that the Park Cafe, our own CNN cafeteria, prices are going up, they buried the lead, they put it way down there, but the fact is it's being passed along to consumers.
CAFFERTY: Is this related to the decline in the number of AOL subscribers, by any chance? The fact that...
CAFFERTY: Yeah. What do you mean they're raising the prices at the Park Cafe?
SERWER: We have to strip that out.
LISOVICZ: You have to find it way down in the little note.
SERWER: Susan's concerned about her cheese sandwich.
LISOVICZ: I am.
CAFFERTY: What about this idea that for three straight months consumer confidence has been declining. When consumer confidence goes down that can potentially be a real problem because they stop spending money and that's what drives this economy.
SERWER: Yeah, and I think that's what that poll really is, in a sense, is consumer confidence. And again, you know, how do you feel about the future if you're paying more out at the pump? Maybe not so great.
LISOVICZ: And you saw one of the pillars of the economy, following 9-11 and recession, was the housing market and when you start to see that cool off, yeah that -- that is something to be concerned about.
CAFFERTY: All right. Well, man the lifeboats.
Washington, this week, came out with a revised version of its food pyramid. That's the visual aid that's supposed to tell us all how to eat, so you don't make yourself fat and sick. After ignoring the old pyramid for years, Americans now get 12 new pyramids to forget about in this latest version. Actually that's not true. I looked at the web, it's not too bad. That's assuming that they can figure out the thing in the first place. All this in a country where we here keep hearing about the obesity epidemic.
For more on all of this, now, we're joined Marion Nestle, who's a professor of nutrition and food studies at New York University and the author of the book "Food Politics."
Marian, nice to have you with us.
MARION NESTLE, NEW YORK UNIVERSITY: Glad to be here.
CAFFERTY: Let me get your take on this government backtracking on obesity. Is this a case of if you can't fix the problem pretend it doesn't exist? That's that mean?
NESTLE: Well, that's a wonderful way to put it. The new study says it is OK to be overweight and that if you are overweight you are healthier than if you're underweight and what it does is confirm what we've known for a long time, which is that overweight itself is not a cause of death, but if unlucky enough to be overweight and have high blood cholesterol, high blood pressure or heaven help you, diabetes, then you need to really worry about it.
LISOVICZ: Yeah, but you know that there are Americans all over just taking comfort in their Twinkies, right now. Do you think that anyone is, sort of, getting serious whether it's the food manufacturers or consumers that, yes, there sometimes can be a fine line between being overweight and obesity. For instance, you were in that very documentary "Supersize Me."
NESTLE: I was.
LISOVICZ: Do you think -- which was a terrific movie, but scary. Is McDonalds and other fast food companies getting religion on that?
NESTLE: Well, I think all of the companies are trying to deal with the overweight problem. If you're overweight it's not a guarantee that you're going to die of some disease, but it certainly raises your risk and the way I look at it is not every overweight person will get type II diabetes, but 85 percent of the people who do have type II diabetes are overweight. It's clearly not a good idea.
SERWER: Well Marion, I am taking some comfort in this fat and 40 concept, you know, over here. I want to ask you a little bit more about the food companies because my understanding is we are producing more calories per capita now than ever before and we keep increasing and increasing the amount of food per person in this country. Of course, meanwhile there are people in North Korea who don't have enough to eat, that's a whole 'nother question.
NESTLE: Called (UNINTELLIGIBLE)
SERWER: Right, but the, there's really no way to regulate food companies or to prevent them from making more food, is there?
NESTLE: No. And they, poor things, are caught in this desperate situation where there's far too much food in the country. Not very equitably distributed and they have to compete in this really competitive environment, so their job is to sell more food. If you're are worried about your body weight, you have to eat less, move more, or do both and, you know what, eating less is really bad for business.
CAFFERTY: You've, I assume, taken a look at this new -- at this new food pyramid.
NESTLE: Indeed, yes.
CAFFERTY: I -- we had an exercise on "American Morning" which is another program I do on the mornings, here on CNN. My producer, for the stuff that I do there, is 25 years old, she's a woman. I'm 62 years old and, obviously, male. You go on this site and you can enter some data by yourself, your age, your sex, and how much physical activity you get on a daily basis. She's 25 and female. I'm 62, male. She exercised 60 minutes a day or more. I put my exercise in between 30 and 60 minutes a day and we got exactly the same recommended diet for both of us.
CAFFERTY: Which, I guess, is OK, but, I mean, what's your take on this thing? I mean, is this helpful or is this just more ways to justify whatever the budget is at the department that makes this stuff?
NESTLE: Well, this is a $2.5 million effort that went to a public relations firm to produce this thing. And it was produced in total secrecy. There was no input from the scientific community, that I know of, that went into this in between the time the committee, that worked on the dietary guidelines, submitted its report last year and all the things that have happened subsequently. So, it's hard to know where this came from. I went on the website, it's kind of fun. The -- I came out with an 1,800 calorie a day diet. If I ate 1,800 calories day I'd be losing weight and would disappear in no time at all.
CAFFERTY: Losing a lot of weight.
NESTLE: I'd be losing a lot of weight. So, I don't know. It's, I think, for people that like this sort of thing. For people that have computers and like to play with them, I think it's kind of fun. For people who don't have computers and that, unfortunately, is a large segment of the population and probably the people who need the advice most.
CAFFERTY: I was going to say, it's the same segment of the population that don't eat as well as they should, too.
NESTLE: Why, these are the people need advice and the help with getting that advice the most. I don't think this is going to reach them.
LISOVICZ: But Marion, OK, so -- so there's this new pyramid out and people can tap into, that like Jack and his producer, but there's still a lot of other messages that are being -- that we're bombarded with. For instance, there's still a lot of marketing to children.
LISOVICZ: And let's face it, children develop these habits and they cause problems down the road. Have we seen any improvements there?
NESTLE: Well, all of the food companies are desperately scrambling to do something that's healthy or at least looks healthy, and many of them are reexamining their marketing practice to children. What they're actually going to do, we don't know yet because we haven't seen the results of it, but they're all announcing these major campaigns not to advertise to children under the age of 11, for example, as Kraft as done. Pepsi Cola is saying that it's going to be doing some efforts to try to improve the health of America's children. The problem is, these companies sell junk food, that's the problem that they have and there's really nothing that they can do to make those junk foods turn into health foods. They still got calories.
CAFFERTY: Professor Nestle, we have enjoyed today's lesson. I thank you for being on the program. Marion Nestle's, professor of nutrition and food studies at New York University, wrote the book "Food Politics."
When we come back on IN THE MONEY, the oldest new thing in advertising: Product placement may be hot these days, but it's not exactly a breakthrough. We'll look at why it can work when a normal ad may not.
And, the plastic tight rope: Going overboard with your credit cards just got a lot riskier. See what's happening to the stock of a big credit card company in the wake of the new bankruptcy law that was signed this week by President Bush.
And looking for daylight: We'll talk with "New York Times" columnist Thomas Friedman. He has a shelf full of Pulitzer Prizes and is probably overqualified to have any discussion with the panel on this program. He's been kind enough to come on anyway, and talk about the long search for peace in the Middle East. Stick around, we'll talk to the author of his new book, it's called, the "World is Flat."
CAFFERTY: Location, location, location, the mantra in the real estate business seems like forever, but it also rings true, apparently, in the advertising world. Big name brands are paying big bucks for something called product placement in movies and TV programs. And it might be paying off for the brands. Our next guest says the price tag for the spots is skyrocketing. Patrick Quinn's the president of PQ Media, a media research firm based out Stanford, Connecticut.
Pat, welcome to the program, nice to have you with us.
PATRICK QUINN, PRESIDENT, PQ MEDIA: Nice to be here, Jack. CAFFERTY: You said the value of product placement going up by as much as 30.5 percent in the last year. With the increasing fragmentation, for example, of the television audience, we all got those dishes, we all got 100 channels and we got the very specialized programs and smaller overall audience than, certainly, the networks used to enjoy 10 or 20 years ago, why is product placement worth more?
QUINN: Well, the growth of product placement is really -- is rather simple, but the reasons behind the growth of product placement are rather simple, but critical to a media industry undergoing rapid change in this era of ad skipping technologies, such as DVRs and increasing audience fragmentation due to the emergence of new media like the internet and video games. As a result, advertisers -- leading advertisers have really ratcheted up the role of -- they've become more skeptical of the old 30 second spot in traditional means of reaching audiences and as a result they're really ratcheting up the use of alternative marketing strategies, such as product placement.
SERWER: So Patrick, let me ask you, there's a story in Friday's "New York Times" it's about -- front page story about a revival of the show "Sweat Charity?" In the 1966 original version someone said -- a waiter said, "Would you like a scotch, sir" in the revival, the waiter says, "Would you like a Grand Centennial brand Tequila?" Now, so, is this destroying popular culture or culture? Is this cute? Is this terrible? What do you think?
QUINN: No, I don't think it is. I think that product placement has been around for hundreds of years. I mean, we have data going back at least 100 years, to the Lumiere Brother films in the 1890's and we have information going back to the Roman empire, so this has been around for centuries and if you look at the history of film and television, product placement has played an integral part, right up to the modern inflection points of Reese's pieces in the 1982 "E.T." and "Survivor" in 2000 when we really see the upswing of product placement in television and in the reality genre, in particular.
The key here is seamless integration. And where we see the advertising market going, over the next few years, five to 10 years, is a real good example of that, as on the "Apprentice" a couple of weeks ago where, I believe it was GM's Pontiac, not only sponsored the show, and ran 30 second spots after each segment, but the entire show was based around GM's Pontiac launching its new Solstice and the challengers were creating a few ad campaign for the Pontiac. Now, I don't know what they paid for that, I'm sure it was lot of money, they got a break on it, but this is where we see advertising and marketing going in the future.
LISOVICZ: That is not seamless integration in the mind of this comsumer.
LISOVICZ: And speaking of the "Apprentice," I think consumers weren't happy to hear that, I think it was Norwegian Dawn, that big cruise liner that got buffeted by these title waves, was trying to get back to New York so that it could make an appearance on the "Apprentice," but that's another story. You mentioned a few movies the "Minority Report," I thought, was a really disturbing glimpse into the future where you are bombard by personal messages, because the way we are going to be identified by our pupils and so on. Do you see that happening that we're walking in the airport or on the streets and there going to be ads talking to us and calling us by name?
QUINN: I think -- I think -- you know, I don't want to go on record with that. I mean, I think we are moving in that type of direction. And you're right that my example of the "Apprentice" was not exactly seamless integration, but the "Apprentice" has become much more overt in the past few years, it wasn't that way originally and that's because consumers -- a recent study that was put out, not by us, but by another firm, showed that 70 percent of Americans are more apt to test or buy a product that was part of a product placement in a show than if they were to watch it in a 30-second spot. And that's important.
CAFFERTY: Is there any way to back up that thing you just said about 70 percent or more likely. How do you go about measuring whether that actually happens or not? I -- you know, I don't recall ever being moved to go buy anything based on seeing a can of soda on a bureau in a movie that I was watching. But apparently, I mean, it does move people. But, how do you measure that? If you're a company that's spending money for this stuff, how do you know whether you're getting a bang for your buck?
QUINN: Very important, return on investment is the key trend in -- throughout the media business. And this is why you see internet search ads, which people thought weren't going to work years ago, are working better than ever because there's immediate return on investment. You can check who's looking at what; you can change your key words at any time, and that's where business is going. What am I getting for my money? And these measurement services, and there are several who are trying to create such measurement services for product placement. I don't know if I can mention names here, but that's not what we do, we try to size and structure the market, but, that they are attempting to measure the affect of product placement and return on investment. So, it's only matter of time before that happens.
SERWER: Patrick, quick last question. I love this stuff, but I mean, can't you take it too far? Like, we don't have cans of Pepsi Cola out here on the desk and then we're going to do a story about Coca Cola. I mean, you've got to have a limit on this stuff, don't you?
QUINN: No, I think you're right. I think you're right. You know, as I mentioned seamless integration is really the key, and I think you can get to a point where you'll turn people off and that has happened. If you look at the restaurant, a couple years ago, where the restaurant was serving, you know, Coors beer in a trendy Italian restaurant, I mean, you know, it just didn't work. He looked like he was, the restaurateur looked like he was read off of queue cards and, you know, that show' not on anymore.
SERWER: All right, we're going leave it at that. Patrick Quinn, president of PA Media. Thanks for coming on the program. I'm not going to tell you what soda I'm going drinking after the break.
QUINN: All right.
SERWER: Coming up, going broke can break you: President Bush has signed a tough new bankruptcy bill which is just what the credit card people wanted. See what that's doing to the stock at a plastic company.
Plus, think of it as one big domino: Thomas Friedman thinks the fall of the Berlin Wall started a series of events that changed our world. We'll hear from the "New York Times" columnist.
And that was then, this is now: Get Friedman's take on what's going on in Iraq and what it means for us. We'll be right back.
LISOVICZ: Now, let's take look at the week's top stories in our "Money Minute." The real estate sector may finally be slowing down. The government reported housing starts plunged by 17.6 percent in March. That was the biggest monthly decline in 14 years. Mortgage applications also fell by 1.6 percent last week. But, prices of homes in the hottest markets, still show no sign of easing off.
Speaking of hot, internet search firm, Google posted some smoking earnings this week. Google said it earned $1.29 in the first quarter that was much better than investors had been expecting. Google said searching ad revenues had a lot to do with the earnings jump, in fact, Google now sells more advertising than most major newspapers, including the "New York Times" and the "Washington Post."
And good news for this year's college grads: The National Association of Colleges and Employers say they'll be getting better starting salaries than the students that graduated last year. It also says more employers are hiring this year than last year. Chemical engineering grads are expected to get the biggest starting salaries, averaging more than $54,000 a year.
SERWER: President Bush signed the new tougher anti-bankruptcy bill into law this week. It makes it harder to use bankruptcy to get from under credit card debt. The measure was pushed for by the credit card companies, of course, and the granddaddy of them all is MBNA. MBNA shares are still trading near 52-week lows, but the question is will this new law really help their bottom line? That makes MBNA our "Stock of the Week."
And you know, just this past Thursday the stock plunged on a day when the markets surged 16 percent down to $19. A couple things going on, first of all, they're laying off 1,000 people. That doesn't sound healthy.
LISOVICZ: And management...
SERWER: The second thing going that's going on was there was something called high payment volumes. I had to write it down. And what that means is that people are paying back their credit card debt faster than the company wants...
LISOVICZ: Good for consumers.
SERWER: That's a good thing, because they see rates rising. That's not good for the company, is it?
LISOVICZ: Yeah, no, it isn't and that -- you have, but you have to applaud consumers getting some of the monkey off their back, but one of the other things they're doing is that they're also going into home equity loans, so they're bypassing them all together, the credit cards, to get rid of their debt, and that's also hurting them. But, one of the things about MBNA, it's really not about their rates so much, it's about their perks, because they're tied to sports leagues and professional organizations, these affinity groups. That's one of the things that they've really been known for and they're going to really have to focus on getting new customers and those high quality customers that all of the banks are trying to get.
CAFFERTY: The perception, out there, is that this bankruptcy legislation really is nothing more than a freebie for the credit card companies, courtesy of Uncle Sam, but it's going to make it tougher on the small guy to get out from under debts, but it's going to be a gift, because now if you owe a bunch of money on your credit cards you a can't just walk into court and say I can't pay this and automatically get it excused. Why is MBNA only selling for about 11 times earnings? I mean, it's pretty cheap stock.
SERWER: Well, I think there are two things going on. First of all, this bankruptcy bill is going to help them a little bit, but not so much and the two bigger factors are: No. 1 is saturation, and this is what you eluded to, Susan, I mean, everyone and their uncle and their uncle, and their uncle's chimpanzee is getting 12 credit card solicitations in the mail every single day. You can be bankrupt and still get them.
SERWER: So, that's No. 1 and then No. 2, I eluded to this, higher interest rates. Those two things are really making business very difficult for this company. It grew like crazy over the past 15 years, but there are only so many credit cards this company can sell.
LISOVICZ: Right, and the bankruptcy bill is going to take a while, one would think, for it to -- for the benefits to, you know, filter -- filter down.
CAFFERTY: So, are you buying the stock?
SERWER: I would be wary.
LISOVICZ: It's pretty cheap right now, very close to its 52 week low.
SERWER: Right. Anyway, the credit card's in the mail.
Coming up on IN THE MONEY: Hello Bangalore: The job market isn't local anymore it's global. See how far away is getting closer than ever when we talk with Tom Friedman, author of the "World is Flat."
Plus, mystic pizza: No, they're not mind readers, but even the local pizza joint might have your number in 2010. Stick around for our fun site of the week.
LISOVICZ: For years now, we've been hearing that technology is making the world smaller. Our next guest says it's also helping to make it flatter. Thomas Friedman is an op-ed columnist for the "New York Times" who's just written a new book entitled "The World is Flat." It's been praised as an easy read on a tough subject, a look how technology and globalization have changed the world we live in for better and for worse. Thomas Friedman joins us from Washington, D.C. to talk more about his book. Welcome.
THOMAS FRIEDMAN, "NY TIMES" OP-ED COLUMNIST: Great to be with you guys.
LISOVICZ: OK, so the world is flat, meaning, that we've become much smaller? Is that basically it?
FRIEDMAN: Well, not just smaller, but we've also created a kind of global economic platform -- a combination of the internet and the falling of the Berlin Wall and new software which connects everyone's software to everyone else's software -- that has basically created a playing field that more people around the world can plug-and-play than ever before. And the creation of this playing field happened to coincide with three billion people who had been out of the game before, namely India, China, and the former Soviet Empire, walking onto the playing field. When do they arrive? Just when it's been flattened, when their kids can now plug-and-play, compete and collaborate with ours, more directly than ever before.
SERWER: Tom, you hear resistance to globalization like this, when you talk about outsourcing and those sorts of issues. I take it you see this trend as being somewhat inextrable (SIC). What should U.S. policymakers be doing about this? I mean, should we be resisting it? Should we be embracing it?
FRIEDMAN: Well, you know, let's -- it has upsides and downsides. Let's look at the up side first of all. The fact is, the United States is the biggest recipient of outsourcing in the world. "Fortune" magazine just did a study of this, only the stuff that foreign countries outsource to us is not low-end call-center jobs. It's things like marketing, legal services, advertising, accounting, design work. Go up and down the east or west coast from Seattle to San Diego, from Boston to Miami, you'll see huge service centers that are really the magnets for outsourcing work from all over the world. These are high-end jobs. So, we put up walls to that, we will be the ones to suffer first and most.
The downside of it, though, is that if you're not one of those knowledge workers, if you are in the lower end of the spectrum, your job could be outsourced the other way, and the challenge for government is really to get more people up to skill, into the knowledge fields, so they can get the best end of the outsourcing and leave behind the worst.
CAFFERTY: Tom, Jack Cafferty. The United States has been the top world economic power for what, over 100 years now, I suppose, running. What are the implications of globalization technology, outsourcing, the kinds of this things we're talking about, in terms of this country's dominance as a world economic power?
FRIEDMAN: Well, I think the way to best express it, Jack, is that, you know, 35 years ago, if you had a choice of being born a B plus student in Indianapolis, or a genius in Bangalor, India, you'd rather be a B plus student in Indianapolis, because your life opportunities, as an American, even as a B plus student, would be so much greater than even a genius born in the heart of India.
Well, when the world goes flat and that genius born in India can now plug-and play, and compete and collaborate as though they were next door, being a B plus student in Indianapolis won't quite cut it anymore, and the challenge really is that.
CAFFERTY: Take that one step further and apply it to the shortcomings of the American public education system, in light of the increased global competition.
FRIEDMAN: Well, we had a remarkable thing happen here, Jack, about a month ago. Bill Gates, the country's, really, leading modern age industrialist stood before the governors of the United States, the 50 governors at the Governors Conference, looked them in the eye, and said, American high school education is obsolete. Our high schools aren't producing the kind of engineers and scientists that a cutting- edge company like Microsoft needs to move ahead, and that's why it's going abroad in some areas.
Now, that speech, I think -- it got about five minutes of air time. Somewhere between Michael Jackson and Terri Schiavo.
CAFFERTY: Yeah, right.
FRIEDMAN: You may have accidentally caught it.
LISOVICZ: If you were maybe watching C-SPAN in the middle of the night, perhaps.
FRIEDMAN: That's right.
CAFFERTY: You might've caught it.
LISOVICZ: You know, historically, I'm just wondering, Tom, because you've looked at previous eras. Is there any parallel, for instance, where you have one superpower, one enormous power that is, in fact, compromised when you have this flattening?
FRIEDMAN: Well, I'm not sure we've really ever seen anything like this before. It's really a good question. All this happened really fast, and it happened so fast, it really took me by surprise, which is why the first chapter of the book is called "While You Were Sleeping," because it really happened, really, under the cover almost of 9/11, the dot com bust, and Enron.
But I've woken up, and I certainly tell my girls, girls, when I grew up, my parents used to tell me, Tom, finish your dinner, people in China and India are starving. And, what I say is, girls, finish your homework because people in China and India are starving for your jobs, and in a flat world, they can have them. This book is really a how-to guide, both, I hope, for the country and for parents, of how to think about that challenge.
SERWER: Can't this country heal itself? I mean, how alarmist is your book? How alarmed should we be, in terms of this country being able to cope with these problems?
FRIEDMAN: It's a very good question, and I have a chapter called "The Quiet Crisis." It comes from a speech by Shirley Ann Jackson, who's the president of Rensselaer Polytechnic, one of the best technical colleges in the country. She basically describes a situation where many engineers and scientists who have been at the cutting edge for us all these years, were inspired to go into science and engineering by President Kennedy and the moon shot. But that generation is really dying off or retiring. Now, we never really filled them in, in the numbers we needed, so what we did was, we imported engineers and scientists from India and from China, primarily.
Well, what happens -- what's happened in the last couple of years is two things. One, 9/11 came along, so we're now telling a lot of these foreign engineers, no, stay home, we don't want the first-round intellectual draft choices of the world to come here anymore if you once transited Riyadh Airport in Saudi Arabia.
And, at the same time, when the world goes flat, you can now innovate without having to emigrate. So you can stay home in India or China. You can stay home, wear a sari, eat curry, live in an extended family, watch Bollywood movies, and you don't have to come and live in Indianapolis or Minneapolis. Because of that, some of them are staying home, too. So, we're in a quiet crisis. It's not going to change our standard of living today or tomorrow, but if we don't start filling in this gap with home grown engineers from our own schools, this will turn into a real crisis. It's a quiet crisis now, but as Paul Romer, the economist at Stanford so rightly says, a crisis is a terrible thing to waste.
LISOVICZ: Tom, you talked about a quiet crisis. When we come back, we're going be talking to you about U.S. security. I know you have some thoughts about that. We have to take a break but we'll continue this conversation on the other side.
Up next, we'll get Tom Friedman's take on the war in Iraq, where it's headed, and whether U.S. troops could be coming home sooner rather than later. Plus, the deadline for Israel to pull out of Gaza, fast- approaching. We'll find out whether the chances for peace in that part of the world are getting any better. Stick around.
SERWER: A lot of people have a lot of opinions on what's going on in the Middle East. We're talking with someone who's paid to give his. Thomas Friedman is a "New York Times" op-ed columnist and author of "The World is Flat," and he's been nice enough to stick around a little longer on IN THE MONEY.
Welcome back, Tom.
FRIEDMAN: Great to be with you guys.
SERWER: What I'm interested in is, how is your flattening concept linked to our war with radical Islam?
FRIEDMAN: Well, you know, one of the things that happens when the world goes flat is that you get your humiliation fiberoptically. You get it at 56k right in the face. That is, you can see just where the caravan is, and just how far behind you are, and I think that's one of the reasons for this radical response of al Qaeda and others we've seen. These are organizations, I believe -- have believed since 9/11 -- that are born of a deep sense of humiliation, a sense that they really are behind the world, and are lashing out.
So, the flattening of the world, both stimulates, partially, this kind of response, and it affects it in another way as well. Unfortunately, the flat world is a friend of both al Qaeda and IBM. It makes it easier for IBM to find customers and workers and knowledge and spread its products and ideas around the world. But, it also makes it a lot easier for the Osama bin Ladens as well. Osama bin Laden understands global supply chain very, very well, and he's basically turned al Qaeda into a suicide supply chain.
LISOVICZ: Right, but he's been quiet, thank the lord, in the United States since September 11, 2001. You wrote an interesting, disturbing column about that recently, that, while everyone's happy that there hasn't been another attack that you think that something else is afoot.
FRIEDMAN: Well, basically, what I was arguing is that, what is the primary objective of the terrorists we're fighting in the Middle East -- these jihadists, Islamo-fascists, Baathists, whatever you want to call them -- their real, primary objective is to defeat America in the heart of their world, because, by defeating us in Iraq, if they can put us on the run in Iraq, that will have a huge resonance. Not only in Iraq, but all across their world. It would shake every Arab regime and empower the religious fundamentalists and Baathists everywhere.
If, on the other hand, we defeat them in the heart of their world, that's a huge strategic defeat for them. And I believe two things: one is they will not go down quietly, and if it is perceived by them that they are losing in Iraq, and they're losing to Iraqis, basically repudiating them, that's when I think they might be most tempted to throw a Hail Mary pass, unleash some kind of active terrorism in the United States that would be so high profile, so loud, that it would disguise the strategic defeat they've suffered in the heart of their world. That was my argument.
CAFFERTY: The other piece of that theory is that -- should there be peace in the Middle East between Israel and the Palestinians, that, too, would come symbolically as a stunning defeat to many in the Arab world. And yet, you mentioned in your column, I think it was last week, that you're optimistic that eventually, this is going to happen. With the passing of Arafat, with Israel's bold steps toward withdrawing from some of the settlement areas like Gaza and places like that, that it looks pretty good there. What are the implications, not just for Israelis and Palestinians, but for this world, kind of, situation we're talking about here?
FRIEDMAN: Well, you know, Jack, one of the reasons the Middle East has been so relatively quiet, vis-a-vis the United States, of late, is the fact that Israelis and Palestinians are working together better than ever. Oh, it's not perfect. But compared to the last three years of intifada, this is a veritable honeymoon, and that creates a lot more space and a much better environment for America to get its message across in that part of the world.
What I also warned is that, if this Gaza withdrawal comes off, if Ariel Sharon is successful in uprooting the Jewish settlements in Gaza, and Abu Mazen is successful in uprooting the terrorist structure within his own camp and actually can sustain a cease-fire with Israel, again, the bad guys in both communities, the real, sort of religious nationalists, violent fanatic minorities, they will not go down quietly. This would be a huge defeat for both of them. In Israel, you know, the nationalist fanatics, when they faced this kind of moment before, assassinated the Israeli prime minister, let's not forget, Yitzhak Rabin. And, they've threatened to do the same to Sharon. Ditto on the Palestinian side, so this is a neighborhood that, the closer you get to that elusive goal, you're going to have to -- the last five yards before this touchdown, boy, they are going to be brutal.
SERWER: So Tom, looking ahead, long-term, big-picture, are you an optimist, flattening war with radical Islam? Where do you see things the next five years?
FRIEDMAN: Well, I'm a Minnesota boy. I'm a born optimist. I grew up in the age of Hubert Humphrey and Walter Mondale, so -- what can you do. You can't take Minnesota out of the boy. I'm going to root for the good guys, there, but I have no illusions. You know, I think what's exciting about the flattening of the world is that we're connecting all the knowledge pools in the world together. The innovation that could spring from that could be amazing. The next great breakthrough in bio science could come from a 15-year-old in North Dakota, or North Bucharest, who downloads the human genome.
But, the scary part is also the next great breakthrough in terrorism could come the same way. I hope the balance is going to be on the right side. I think it can be. We're going to have to shape this right.
LISOVICZ: Thomas Friedman, the Pulitzer prize-winning columnist for the "New York Times" and author of the new book, "The World is Flat: A Brief History of the 21st Century," thank you for joining us.
FRIEDMAN: Great to be with you guys. Thank you.
LISOVICZ: Coming up, give me a cheese and mushroom, and skip the waiver: see how you might end up ordering pizza in 2010 on our fun site of the week.
And, whether you want pizza or world peace, write and tell us what's floating your boat these days. The address is firstname.lastname@example.org.
But, first, this week's "Money and Family."
Thinking of sprucing up your home by adding a deck or putting in another bathroom? Well, before you start hiring for the project here's some quick tips for finding the right person for the right job, ask around. Try getting recommendations from family, friends, and co- workers. A good referral is a good first step.
Know who you're dealing with. Make sure any contractor you hire is licensed and insured. You can check with the Better Business Bureau or Home Builders Association to see if any complaints have been filed.
Don't rush into signing a contract. Read it thoroughly. And the lowest bid may not be the best bid. Remember, you should always get a copy of the signed contract before any work on your home begins.
And finally, don't hire a contractor who wants to be paid up front. One-third of the total cost is a common down payment. Don't make the last payment until the work is complete. That way you can be sure the project is done to your satisfaction. Good luck.
I'm Susan Lisovicz from Money and Family.
CAFFERTY: Well, my dear friend the Web master Allen Wastler is not with us today. A much-deserved day off for that man. But that doesn't mean we don't have the fun side of the week for you. We do indeed. This one takes a stab at what the might be like ordering a pizza five years from now.
UNIDENTIFIED MALE: Well, I'd like to order a couple of your double meat special pizzas.
UNIDENTIFIED FEMALE: Sure thing. There'll be a new $20 charge for those, sir.
UNIDENTIFIED MALE: What do you mean? UNIDENTIFIED FEMALE: Sir, the system shows me that your medical records indicate that you have high blood pressure and extremely high cholesterol. Luckily, we have an new agreement with your national healthcare provider that allows us to sell you double meat pies, as long as you agree to wave off future claims of liability.
UNIDENTIFIED MALE: What?
UNIDENTIFIED FEMALE: Do you agree, sir. You can sign the form when deliver, but there is a charge for processing. The total is $67 even.
UNIDENTIFIED MALE: $67?
UNIDENTIFIED FEMALE: That includes the delivery surcharge of $15 to cover the added risk to our driver of traveling through an orange zone.
UNIDENTIFIED MALE: I live in an orange zone.
UNIDENTIFIED FEMALE: Now you do. Looks, there was another robbery on Montrose (ph) yesterday. You could save $48 if you ordered our sprout submarine combo, and picked it up itself, comes with tofu sticks. Those are very taste, sir. Good value too.
UNIDENTIFIED MALE: But I want double meat.
UNIDENTIFIED FEMALE: Well, I'm sure you can afford the $67.
SERWER: I think I would take a baseball bat to the phone a long time ago before I got to that point.
CAFFERTY: Quit eating pizza.
LISOVICZ: That is funny and sad...
SERWER: And scary.
LISOVICZ: ... at the same time.
CAFFERTY: All right. Coming up next on IN THE MONEY, as we continue, it's time to hear from you as we read some of your e-mails from the past week. And you can send us an e-mail right now, if you choose. We're at email@example.com. Back post haste.
CAFFERTY: It is time now boys and girls, to read your answers to our "Question of the Week" about whether high gas prices will affect your summer vacation plans.
T.R. wrote us this -- "I still plan to travel by car and do a lot of camping and sightseeing, but high gas prices will prevent me from going to restaurants, museums, and amusement parks. Higher gas prices are affecting my spending right here at home."
Lloyd wrote, "My vacation plans aren't going to change at all, because I expect the price of gas to come down like it always does eventually. People need to be more optimistic."
And Dave in Florida weighs in with this, "I only wish I could change my plans due to gas prices. But because of our economic situation overall, I've been on an unwanted permanent vacation from work for quite a while."
Next week's "E-mail Question of the Week is as Follows." What story do you think the news media hasn't been covering enough in the last few months?
Besides the pope, Terri Schiavo, and Michael Jackson, I mean.
LISOVICZ: Could we weigh in that?
CAFFERTY: No. Send your answers to firstname.lastname@example.org. And you should visit our show page at money.com/inthemoney which is where you'll find the address of our fun site of the week, which is the ACLU Web site about what it's -- it' like to order pizza five years from now. It's pretty funny actually.
Thank you for joining us for this week edition of IN THE MONEY, appreciate it. My thanks to CNN correspondent Susan Lisovicz, "Fortune" magazine editor at large, Andy Serwer.
I invite you to join us next week, Saturday at 1:00, Sunday at 3:00 for more fun on IN THE MONEY. Or you can catch Andy and me all week long on "AMERICAN MORNING" which begins at 7:00 Eastern time. Thanks for today. Enjoy the rest of your weekend.
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