NOW with Bill Moyers; 127; Tax havens; E-cycling; John Bogle; George C. Wolfe

NOW with Bill Moyers

Transcript - July 19, 2002

ANNOUNCER: You're watching NOW with Bill Moyers. With contributions from NPR news. This week on NOW...

BILL MOYERS: This week on NOW, the shockwaves from corporate scandals reach Main Street, and millions of Americans feel betrayed.

SEN. CHARLES GRASSLEY, (R-IA): There's a real feeling out here that very wealthy people, as well as corporations, have breaks that other Americans don't.

MOYERS: Now some corporations have a new scheme: changing their address to avoid their fair share of taxes.

And an investment industry giant John Bogle says, enough is enough.

JOHN BOGLE: We've let greed take over. We've let the short-term take over instead of the long-term.

MOYERS: And you see what's on your television, but did you know about the poisons inside the set?

A report on the toxic ghosts in our electronic landfills.

MOYERS: And celebrating Harlem in song and the triple-threat talent behind it, George C. Wolfe.

GEORGE C. WOLFE: I think so much of creativity comes from the images and impulses of childhood.

MOYERS: Welcome to NOW.

There's an extraordinary drama playing out in Washington.

You can't see it because it's happening behind the scenes. But the outcome will affect our lives, our pocket books, and our country for years to come.

The issue is corporate accountability, how to clean up a business environment that has thrown governance to the wind and ethics to the wolves.

This week Democrats who control the Senate passed tough measures to crack down on securities and accounting fraud.

The Republicans who control the House are trying to butcher those reforms without leaving any fingerprints on the knife, hence the secrecy and closed doors.

What's happening goes to the very nature of democracy, money, and power.

Corporations enjoy the status and privilege of citizens. They need and want a society that works, where police and courts dispense justice, air traffic controllers bring airplanes down safely, schools teach, and the government keeps the terrorists out.

But increasingly corporations don't want to pay anything to make society work. They'll do anything to avoid their fair share of the bill, even leaving the country without actually going anywhere.

That's the subject of our first story tonight. NOW'S Bryan Myers prepared this report.

BILL MOYERS: Employees of the Stanley Works Corporation gather outside the company's gates in Connecticut.

They have come to protest the company's plans to register as a corporation overseas….In a popular off-shore tax-haven: Bermuda.

DENNIS O'NEIL: It's, in my opinion, immoral, if not illegal. I pay taxes here in the United States of America. I can't move anywhere and get out of my obligation to pay.

MOYERS: You may not have heard about the Bermuda move, but you have heard of Stanley — it's the world famous tool and hardware maker — an American company that has called Connecticut home for almost 160 years. Now it wants to move its headquarters to Bermuda. The reason? To avoid an estimated 30 million dollars a year in U.S. taxes.

BRIAN ANDERSON: I'm here because I'm disturbed that Stanley would move out of the United States when our country, and particularly this community, New Britain, Connecticut, has been so good to Stanley over the years.

MOYERS: The implications for America's ability to collect revenue are enormous. Stanley will be joining a growing list of big American companies which have established off-shore headquarters to avoid corporate taxes. In fact, in just the last few years, an estimated 25 companies — many of them fortune 500 firms — have reincorporated off-shore for just that reason. And it's all perfectly legal.

ROBERT WILLENS, MANAGING DIRECTOR, LEHMAN BROTHERS: It allows them to reduce the amount of U.S. taxes they pay, and the reduction in U.S. taxes increases their profits dollar for dollar — it's that simple.

MOYERS: Robert Willens has advised companies on relocating off-shore. He's a Managing Director at the Lehman Brothers investment house, one of many firms that advise companies on tax strategy. Although Willens doesn't always recommend an off-shore move, he says the benefit to the bottom line can be hard to resist.

WILLENS: It's hard to argue with the numbers because you do see dramatic improvements in profits immediately. Stanley has advertised an annual tax reduction of $30 million dollars, and I think that might even be a little low.

MOYERS: So how is it that a big company like Stanley can avoid taxes simply by changing its address to Bermuda? The answer begins with U.S. tax law and the practice known as "Worldwide Taxation."

PAMELA OLSON, ACTING ASSISTANT SECRETARY OF THE TREASURY FOR TAX POLICY: Well, the big difference is that the U.S. system taxes on a worldwide basis. So it doesn't matter where you're earning your income, we're going to tax it here in the U.S.

MOYERS: In other words, if Stanley sells a hammer in Europe, that sale, or at least a portion of it, can be subject to tax here in the U.S. But Stanley also pays tax on that income in Europe. So under U.S. law, companies like Stanley sometimes end up paying tax on their foreign income twice.

But Bermuda has no income tax. So if Stanley makes Bermuda its home, it only pays tax on that sale once, in Europe, where it sold the hammer. So if you're like Stanley, and selling a lot of products overseas, you can save money by getting yourself an off-shore address.

WILLENS: Every multi-national company that does this will experience an immediate and substantial reduction in taxes.

MOYERS: But here's the fiction behind these relocations: Companies don't actually move any workers off-shore, or even set up an office there.

WILLENS: In fact, nothing much of substance happens at all. A post office box is obtained in Bermuda, a modest fee is paid to the Bermudan government for the privilege of incorporating there. But no change whatsoever occurs in the company's business operations.

MOYERS: Companies like Stanley create the off-shore corporation in name only. That off-shore company — with no workers, and no office — is then made the parent of the American company.

WILLENS: The U.S. company, the original parent of this worldwide group of corporations, is now becoming a subsidiary. It's literally being stood on its head, so that it is now a subsidiary of this new shell company that's formed in Bermuda.

MOYERS: Stanley declined to be interviewed for this story, but in a press release about its proposed move, admits, quote, "Corporate operations will continue to be managed from our current headquarters in New Britian, Connecticut, and these changes will not affect day-to-day operations."

You get the same candor from the giant equipment maker, Ingersoll-Rand, about the Bermuda address it recently set up. The company freely admits it simply hires a service in Bermuda to collect its mail — when its real headquarters is in Woodcliff Lake, New Jersey.

WILLENS: It is perfectly proper within the law naturally to take steps to avoid taxes. And to play devil's advocate for a second, there are a lot of people who would argue that this is exactly what management is supposed to be doing.

SEN. CHARLES GRASSLEY, (R-IA): Now these things really are not illegal, but they're surely immoral and unethical.

MOYERS: Iowa Senator Charles Grassley is no fan of the taxman. A prominent Republican, he has often criticized the IRS. But even he says this use of off-shore shell companies is nothing more than a scam.

GRASSLEY: We have the Stanley Corporation, for instance, going to Bermuda, setting up a shell corporation to avoid millions and millions of dollars in taxes in the United States, outright — in fact, they're very candid about it — outright tax avoidance.

And that seems to me to be wrong. Particularly other corporations stay here, pay their fair share, and the poor and the middle class working man and woman is going to end up paying for the bill that Stanley, for instance, doesn't pay.

MOYERS: Senator Grassley is leading an effort to outlaw the loophole that allows this use of off-shore shell companies, arguing that a company must have "real & substantial" operations where it is incorporated. Since the terrorist attacks of September 11th, his campaign has taken on a new urgency.

GRASSLEY: You know, American corporations would have never done this in World War II. And we're in the biggest war and threat to security of the United States since World War II, and it seems to me we ought to be pulling together in the same way and that includes all the major corporations.

ERIC SCHLECHT, THE NATIONAL TAXPAYERS UNION: They are working within the framework of the existing tax code to the best benefit of their corporation and their corporation's employees. Why is that unpatriotic?

MOYERS: Eric Schlecht works for the National Taxpayers Union, an anti-tax organization. He says that avoiding taxes by any legal means possible is not only good business, it's a well-established legal right.

SCHLECHT: To suggest that you're unpatriotic to attempt to keep as much of your hard-earned money suggests that the money you earn belongs first to the government and second to you. Which I doubt very much many taxpayers would agree with.

MOYERS: As Cchlecht points out, the Y.S. is almost alone among nations in its practice of taxing worldwide income. He says that creates the double taxation that motivates companies to move off-shore. He's not alone in that opinion.

DAN MITCHELL, SENIOR FELLOW, THE HERITAGE FOUNDATION: Businesses choose to incorporate where you have the best set of laws to govern the corporation. The problem is that our Internal Revenue code makes American-based companies very uncompetitive.

MOYERS: Dan Mitchell is a Senior Fellow at the Heritage Foundation, a conservative think tank

well-known for its anti-tax views. He argues: don't outlaw the loophole — re-write the tax code.

MITCHELL: Let's fix the problem in our tax code. Let's not blame the victims who are simply trying to compete on a level playing field.

MOYERS: The Bush Admininstration has been listening. The Heritage Foundation and the National Taxpayers' Union have been granted several meetings with key administration officials, including Treasury Secretary Paul O'Neill and Chief Economic Advisor Lawrence Lindsey. One anti-tax advocate characterized them as "sympathetic to our ideas."

But there's more to this story than first meets the eye. As we heard, the ostensible reason that companies locate off-shore is to avoid taxes on income earned outside the U.S. They're still supposed to pay taxes on income earned within the U.S., but once they get off-shore, some companies find a way to beat those taxes, too.

BOB MCINTYRE, CITIZENS FOR TAX JUSTICE: The companies are trying to tell anybody who will listen, who's naïve enough to believe them, that they're trying to avoid taxes on their foreign profits. That's just a lie.

MOYERS: Bob McIntyre runs Citizens for Tax Justice, a liberal organization that studies tax revenues. He says the real story here is not that companies are moving off-shore to just avoid taxes on foreign income. He says they're moving in order to get out of paying taxes altogether — even on income earned in the U.S.A.

MCINTYRE: The problem is these are American companies doing business in America who ought to be paying American taxes, and they'd just as soon not, so they are trying to find a way around it.

MOYERS: In one scheme, the off-shore shell company loans money to the American subsidiary. The interest the subsidiary pays on that loan can then be claimed as a deduction on its U.S. tax return. Critics say it's like you lent yourself money, charged yourself interest, and then wrote the interest off on your taxes.

In a second scheme, the American subsidiary pays the off-shore shell company for the use of the company's trade name. In other words, the company is charging itself for the use of its own name. That creates another tax deductible business expense in the U.S.

Yet a third scheme involves the paper shuffle of merchandise. The American subsidiary manufacturers a product. It then "sells" the product to the off-shore shell company at a rock bottom price. Remember the off-shore shell exists in name only, so no products are actually shipped. The shell company then makes the final sale to the consumer. So, most of the profits appear to have been earned by the off-shore company, free of U.S. taxes.

PAMELA OLSON, ACTING ASSISTANT SECRETARY OF THE TREASURY FOR TAX POLICY: Yes we do view that as inappropriate...

MOYERS: Pamela Olson is the Acting Assistant Secretary of the Treasury for Tax Policy. She says the Treasury Department does want to eliminate these schemes to beat taxes on American income. It's writing new rules to clamp down on them and directing auditors to keep companies in line.

OLSON: I think it's very troubling to think you can file a few pieces of paper, and by filing a few pieces of paper, drastically alter the way you business is taxed.

MOYERS: But while off-shore incorporation is "troubling," Olson says, simply slamming the door shut on the right to do it — as Senator Grassley wants — is "shortsighted."

OLSON: We don't think you can erect a Berlin Wall and keep companies in the U.S. We think you have to address the underlying problems that are causing companies to go, and that's going to be a more effective and direct approach.

MOYERS: This whole debate over off-shore shell companies, and how they're used to avoid taxes, is taking place against the bigger backdrop of an overall decline in the amount of taxes paid by U.S. Corporations. In 1960, corporations paid 24% of all federal taxes. In the 1970's, that share fell to 15%. As recently as 1996, it was 12%. Now, corporate taxes make up only about 8% of U.S. revenues. That, Bob McIntyre says, is the result of all sorts of loopholes and laws, written by politicians friendly to corporations. Reform, he says, must come from the top.

MCINTYRE: The President ought to step up to the plate and say it's not patriotic for big American companies not to pay any taxes on their American profits. Until he says that, well, he's on the other side and that's too bad.

MOYERS: McIntyre has also found that in recent years, some of America's biggest companies — household names like Texaco, Goodyear, and General Motors — actually got tax rebates, even though they turned a profit.

GRASSLEY: For the middle-class American primarily, but any wage earner, salaried person, there's a real feeling out here that very wealthy people, as well as corporations, have breaks that other Americans don't. And consequently, people are cynical about taxes.

RICHARD TRUMKA, SECRETARY-TREASURER OF AFL-CIO: The CEO and the rich always figure out ways to avoid taxes. It's the workers who don't get that chance.

MOYERS: You hear that a lot among the workers back at Stanley. The company's move may not be threatening their jobs, but they fear it could be the beginning of a slippery slope. Also, they say they are fed up with a system that is rigged in favor of big corporations. These workers want corporations to be good citizens of the country that has enabled them to flourish.

TRUMKA: They want to take the advantage of all of the advantages that the American market has to offer, and think that they have no responsibility. No responsibility to the workers, no responsibility to the shareholders, no responsibility to the community, no responsibility to the state and no responsibility to the country.

MOYERS: And in perhaps one of the few instances in which a powerful Republican agrees with a high level union leader, Senator Grassley concurs.

GRASSLEY: After all, it's because of America and the freedom, the economic freedom that we have and the political freedom that we have, that these corporations have done so well in the first place.

MOYERS: Reforming tax havens is slowly catching on in Congress. The Senate Finance Committee has passed legislation to let the government continue collecting federal taxes even if a company changes its address.

Over in the House of Representatives, Democrats are trying to force a vote on a bill that would deny tax breaks and federal contracts to any company moving to a haven like Bermuda.

A Republican bill would halt off-shore incorporations, but only temporarily. And the lobbyists are lined up knee deep to make sure that whatever emerges looks and smells more like Swiss cheese than reform.

Here to talk to me about the crisis of confidence in corporate America is one of the investment industry's "four giants of the 20th century." That's how FORTUNE magazine describes John Bogle.

Back in 1974, Mr. Bogle founded the Vanguard Group, which he then grew into one of the two largest mutual fund organizations in the world. After 25 years as Vanguard's chairman, he founded the Bogle Financial Markets Research Center and continues to serve as its president.

In addition to writing books — this is his latest — and spending time with his 12 grandchildren, John Bogle has been speaking out for strong measures to curtail corporate abuses.

Welcome to NOW.

BOGLE: Great to be here with you, Bill.

MOYERS: Tax havens, accounting fraud, inside dealing, astronomical salaries without merit.

What else can go wrong with corporate America?

BOGLE: Well, I think we must be getting pretty much to the bottom of the ill-doing barrel by this point.

I don't think too much else can go wrong, but I think there's probably some very important systematic changes we've got to make in the way American corporations are governed.

MOYERS: Well, why were so many corporate executives and boards of governance blind to what they were doing to the country and to the ordinary people who invest in your mutual funds?

BOGLE: Well, I think you'd have to agree with Chairman Greenspan, it was greed.

MOYERS: Infectious greed.

BOGLE: Infectious greed, to follow irrational exuberance.

MOYERS: But what happened to the watch dogs?

BOGLE: Well, the watch dogs didn't do a very good job.

Among the biggest watch dogs, and we haven't heard or read very much about any of this, are the owners of all these corporations themselves. And by and large, you can focus down on 75 large financial institutions that own 44% of all the stock in America.

MOYERS: You mean like mutual funds...

BOGLE: Mutual funds.

MOYERS: Pension funds.

BOGLE: Pension funds, exactly.

MOYERS: What do you mean we haven't heard from them?

BOGLE: And we don't hear a thing from them.

The... I call it the silence of the funds, and the reason for that I think is that we're so focused in this recent era on the price of the stock rather than the value of the corporation.

MOYERS: You saw our report on offshore tax havens.

BOGLE: Yes.

MOYERS: What do you think about that?

BOGLE: Well, I thought your report was right on the mark, but I would add this. And that is, when companies have gone to Bermuda, say, they have not told their stockholders, adequately informed their stockholders that their shareholders' protections there are by most legal opinions considerably less strong than they would be in the U.S.

MOYERS: What does that mean?

BOGLE: That means that if a shareholder wants... A shareholder wants to go to court to enforce his or her rights against the corporation, that the governance standards down there are weakened.

There's even some question about whether certain S.E.C. rules apply to corporations who are headquartered outside of the United States.

MOYERS: do you think they're then doing it just because they want to save taxes for short-term advantage?

Or is there some larger mission that they get?

BOGLE: No, I think tax saving as it were is the basic mission that they're trying to follow, but it seems so absurd to say you can move a mailbox to Bermuda and say you're incorporated there.

And I think at that point the government ought to step in and change the law to make that not possible.

MOYERS: Well, even as we talk, Mr. Bogle, that's what the government is trying to do.

There's a bill in Congress as we talk designed to end these tax havens, but there's a strong pressure from corporations and others behind the scenes to make sure that that reform doesn't happen.

BOGLE: You're asking me to explain something that I find inexplicable.

You know, we have responsibilities as citizens of the United States.

Corporations have responsibilities as corporate citizens. And those responsibilities are heavy responsibilities. They're not just rights.

They're an obl... We have some ethical obligation, some fiduciary duty to do the right thing in America, and I think corporations have ignored that to too great an extent.

MOYERS: But there is an argument that capital is politically neutral, that capital goes where it can serve its own interest irrespective of national or political boundaries. What do you think about that?

BOGLE: I don't think that's true. I think there's huge accumulation of capital that we've seen by executives in corporations has for one thing, been used for political purposes that I find quite disturbing.

The role of corporate giving in our political system is not a good role.

Corporations are able to buy things that you shouldn't...

That shouldn't be for sale in this country.

MOYERS: Such as...?

BOGLE: Well, favorable tax treatment... Favorable votes on things that affect their business, things of that nature.

MOYERS: Even as we talk, members of the senate and the house are meeting to work out some kind of compromise on legislation to prevent some of these scandals from happening again. Would it surprise you if I told you that the politicians on that committee have received more than $1.3 million from the big five accounting firms in its trade group?

BOGLE: No, it doesn't surprise me at all.

And if you think about corporations who invest capital to get a return on capital, I can assure you there is no capital investment with a higher rate of return than political contributions. You know, you've probably got a 300% rate of annual return on political contributions, just to pick a number out of the air, where 20% or 15% might be the going rate for building a new plant. It's a big difference.

MOYERS: That seems to me to be the fundamental way in which capitalism has changed. I mean, we've always had predators, but we now have a predator class that has enough political clout and enough control of the media to keep the government from protecting the public interest. That seems to me to be the big change.

BOGLE: I think it is a big change, and I think the political reform, contribution reform, will help.

But I really think it's a question of restoring some sort of an ethical sense in American business.

I believe that the government is not in a position to do that.

I believe that what we need to do is have the owners of the stock speak up, the mutual funds speak up, the other institutional investors. And they've got to have more of an investment focus compared to a speculative focus, and they've got to finally get to a stage where they realize that corporations should be treated as part of their stewardship responsibilities and not as part of their marketing responsibilities.

MOYERS: But when these big institutional mutual funds and pension funds speak up, what should they be saying?

I mean, because they have been relying upon data provided them from corporations that were deceiving them.

What should they be asking for?

BOGLE: Well, first of all, i'll just envision this group of 75 institutions owning 44% of the stock, and envision that as one institution, say they could speak as one in certain ways.

If you go into the president of the corporation and say, "i want you to open the books for me," The president of the corporation will say, "yes, sir."

That's what you say to a 44% owner, but not to 11 4% owners.

MOYERS: What do you think the government should do?

Right now, as we talk, again, there's this epic battle being waged over corporate reform. Democrats in the Senate want very tough measures. Republicans in the house are trying to dilute those measures.

They say that if you go too far in regulation, you'll kill the goose that laid the golden egg.

BOGLE: Yes.

MOYERS: What do you think the government should do now?

BOGLE: Well, first of all, I think the government ought to speak out and demand that investors, and particularly institutional investors, take the responsibility that's theirs. Why on earth aren't the investors who own these corporations doing more?

MOYERS: Well, why aren't they? That's what I need to know.

BOGLE: Well, first of all, because they're engaged in short-term speculation on stock price rather than the long-term corporate value, and second, because they had this conflict of interest, and third, truth told, there's not only a usual inertia about proxy voting.

It's kind of a slow process that needs some improvement, but there's also the fact that the governance standards in the mutual fund industry are even lower than the governance standards in corporate America.

So I call it the "people who live in glass houses shouldn't throw stones" kind of a syndrome. So there have got to be more of us that stand up and be counted.

MOYERS: I und... I take that and believe in that.

But in addition to that, what do you think the government should do?

BOGLE: Okay. I think the government, one, should make sure that stock options are accounted for in a proper way, expensed.

I've heard compensation consultants say the wonderful thing about stock options is they're free.

Well, that's ridiculous.

They cost a lot of money to investors.

Corporations go out and buy their own stock with cash when the executives exercise those options, by the way.

So there's a lot of money changes hands here. And that would be the first thing: make sure the cost of stock options is accounted for.

MOYERS: And Coca-Cola announced this week and the WASHINGTON POST announced this week it would... They would in fact do...

BOGLE: And that will, of course, result in the reduction in reported earnings, but it's a reduction that should have taken place all along.

MOYERS: It's a realistic...

BOGLE: Yes.

MOYERS: ...world then. All right, what else?

BOGLE: Okay, second thing is I think the bill before the Sarbanes Committee should be even strengthened and put into law, which is to create self- regulation has failed in the field of public accounting.

That's all there is to it. We may wish it had not failed. I'm not a big government interventionist. But if it fails in the private sector, the public sector has to take over.

So I'd say the federal... A federal accounting standards board set principle based accounting standards would be a big help in all this. I think some of the things the government is doing, I think tougher jail penalties are in order.

I think that's wonderful.

Hopefully they will be in real prisons and not in these country club kind of prisons.

I think immediate reporting of executive transactions, which the S.E.C. is now starting to get to, is another important thing. But mostly I think it's the private work backed up by the public support.

MOYERS: But the securities industry on the whole and the accounting industry and the business roundtable and the chamber of commerce do not want the public sector, the federal government, looking out for the public interest. They're up there lobbying, no matter what they say publicly right now, they're up there lobbying to dilute the Paul Sarbanes bill that's come over to the house from the Senate.

BOGLE: They certainly are, and we've just got to get over that.

We have to have Congress stand up, and we are now getting... I think we see in the public mood a real antipathy to what's going on.

If the public speaks and if investors start to vote with their feet, you will see a lot of change in this system, but it can't happen without a sense of public outrage, and I think that's starting to develop.

MOYERS: I don't know what your politics are, Mr. Bogle, but what do you think about the fact that Washington seems to be run right now by people who have the mentality and follow the model of a Fortune 500 company?

BOGLE: I think private enterprise is one thing and public duty is quite another, and I don't think we should mix the two very much. I mean, certainly the government has some aspects of a corporation and a chief executive and a marketing director and all those things, a finance director.

But the government is invested with a far bigger responsibility than just simply looking to some distant bottom line.

The government has a public duty. Our founding fathers had principles that I think would leave them appalled at what's going on today.

MOYERS: The moral philosopher Adam Smith or the founder of modern capitalism, he thought commerce and finance should be grand and noble enterprises.

BOGLE: Yes, I recognize the quote.

MOYERS: Do you think he would be turning over in his grave today?

BOGLE: I think he would be. He wouldn't recognize what is being done in some cases, paradoxically not being done in his name today.

You know, he didn't just write THE WEALTH OF NATIONS, he wrote the THEORY OF MORAL SENTIMENTS. And that was a book where he expressed the reason, the conscience, the inhabitant of the breast guiding us in doing the right things for our fellow man.

And we all know that's what we should do, but we'd gotten off that track in America.

MOYERS: Thank you very much for being here today, and thank you very much for speaking out.

BOGLE: Great to be with you.

MOYERS: We've all heard of planned obsolescence, making things that are designed not to last.

We throw away so much that our landfills are filling up with some pretty noxious stuff. The latest toxic twist is that the computers we used to produce this broadcast and the television set you're watching right now have a poisonous afterlife.

Here's our report from NOW producer Rick Field and NPR correspondent Emily Harris.

EMILY HARRIS: Picture tubes. These contain the poison in your TV set and computer screen. Lead is a crucial ingredient of the glass in the tube. It's there to protect from radiation and won't hurt you while the tube whole. But if an old TV or monitor is just tossed in the trash, the lead can trickle out.

MARK MURRAY, EXECUTIVE DIRECTOR, CALIFORNIANS AGAINST WASTE: We've banned lead in paint. We've banned lead in our gasoline, because lead is poisonous to use. It, it damages the central nervous system. And that — the TV goes to a landfill, it gets compacted in the garbage truck. It gets crushed in a landfill. And the lead can make its way into the environment.

EMILY HARRIS: To keep lead out of landfills, picture tubes must be handled specially. In California trash haulers now separate monitors and TVs from the rest of the garbage.

Only two states, California and Massachusetts, require that television sets and computer monitors get recycled. Anywhere else in the country, throw your old TV in the trash and it's going to the landfill.

Twenty million computers become obsolete every year. Just over ten percent are reused or recycled.

Internet entrepreneur Kevin Welsh has founded several high-tech companies. As his needs change, he simply tosses old technology on to the discard pile.

KEVIN WELSH, FOUNDER, ANTICS ONLINE: In the past, we've actually called up some local schools, to see if they wanted a computer. But I guess this being silicon valley, unless it was a state of the art computer itself, they really weren't interested.

EMILY HARRIS: Lots of other people don't know what to do with old computers. A few months ago, Oakland resident Sophia Tselentis tried to leave one at the curb.

SOPHIA TSELENTIS, OAKLAND RESIDENT: I put out the computer, the keyboard and the monitor. And they took the keyboard and the computer, but would not take the monitor

EMILY HARRIS (ADDRESSING TSELENTIS): What did you do with that monitor?

TSELENTIS: Um, I don't have it anymore.

HARRIS: This time, Tselentis tried to sell another old computer. She couldn't find a buyer. Instead, she took it to a community center to fix up and give away.

DROP-OFF CENTER EMPLOYEE TO TSELENTIS: You know about the fees we charge for things?

HARRIS: It cost her twenty dollars. Other places charge as much as sixty five to accept an old TV. And since picture tubes were banned from California landfills, some taxpayers are picking up the disposal tab individuals don't want to pay.

SUSAN KATTCHEE, RECYCLING SUPERVISOR, CITY OF OAKLAND: When the TVs and monitors got banned, one of the things that we noticed here in Oakland is that they started showing up on our streets — as sort of illegally disposed of materials and something the city now had to deal with.

We now have to send an additional crew out, with a separate truck, because the TVs and monitors have to be specially handled on the streets. They can't just be picked up and thrown in a regular garbage truck.

HARRIS: Even some charities in California that once took used computers or TVs to resell them can't afford to do that anymore. Disposal costs have outstripped potential income.

TERRY FITZPATRICK, SENIOR VICE PRESIDENT OF OPERATIONS, GOODWILL OF GREATER EAST BAY: We used to get — this is the local Goodwill about 50 thousand dollars a year in revenue from the sale of TVs and computers. Well, since we no longer accept them due to the high cost of disposal not only have we lost that revenue source, but our costs for handling and disposing of those items has gone up as well. And that can be as high as forty thousand a year.

HARRIS: But Goodwill still gets old TV sets abandoned at its gate. Facing growing mounds of obsolete computers, full of toxic parts, California legislators are trying to figure out how to fund recycling programs. They're negotiating adding an up front recycling fee — as much as thirty dollars — to the price of every TV and computer monitor sold in the state.

Oakland's Susan Kattchee approves of that idea.

SUSAN KATTCHEE, RECYCLING SUPERVISOR, CITY OF OAKLAND: The cost for disposal needs to be built into the product itself, so that whoever buys or wants to use that product pays for the cost of disposal at the time they purchase it.

HARRIS: But industry is fighting fees at point of sale — fearing higher prices will slow new purchases and saying it will be difficult to enforce, especially on Internet sales. Some environmentalists say manufacturers should take back their old products and deal with the waste problem directly. Several big producers are trying to do just that. Near Sacramento, Hewlett Packard runs a center that, for a price, will take back any old computer and resell it — either whole or broken down.

RENEE ST. DENIS, BUSINESS MANAGER, PRODUCT RECYCLING UNIT, HEWLETT PACKARD: I think we have as much responsibility as anybody in the value chain.

What isn't possible is for us to dictate what the consumer's behavior is gonna be at the end of the product's life. I can't go into somebody's house and take their old PC away. So, we have to rely on them, to have the responsibility to actually make sure these things get into the right system for recycling and disposal.

HARRIS: Hewlett Packard put ten million dollars into this facility and a similar one in Tennessee. The company says it's worth it to know they can manage toxic waste safely. But the giant garbage company, Waste Management, says the most convenient way to set up electronic recycling is at the curb. And for recycling to really take off, there needs to be a steady stream of funding. Perhaps through garbage collection fees.

KEVIN MCCARTHY, DIRECTOR OF ELECTRONICS RECYCLING, WASTE MANAGEMENT: The, the components that make up a television, they're not valuable enough for recyclers to live off just the value of removing those parts.

HARRIS: Computers have always become quickly obsolete. People usually kept TVs longer, but now there are flat screens and high definition TV. Waste handlers are expecting to be hit by a cascade of older electronics.

VICTOR MOORE, SUNSET SCAVENGER: We pick up yesterday — or a couple of days ago, we picked up about eight TVs at one house. They were smaller TVs but people — the gentleman said he had them for 20 years just there.

HARRIS: Recycling old computers can mean a lot of different things. Some organizations refurbish donated computers. This company profits on the edges of American excess. HMR makes money by buying stacks of old computers, cheap, from companies that are upgrading. They're checked out to see what still works and sold wherever they can go.

CHRIS JANKOS, US DIVISION MANAGER, HMR: We can still sell quite a few monitors here. Usually of the vintage 98, 99 and newer, but anything older than that, if it's working, it'll go to our Philippines branches for resale. If it's not, then it'll go to Sacramento for disassembly, demanufacture.

HARRIS: Now we have plastics, cables and wires, and circuit boards. Many of these contain valuable materials, and toxics. The question is — where do these go from here?

SUPER: COURTESY BASEL ACTION NETWORK AND SILICON VALLEY TOXIC COALITION: For years, computer parts have gone from "recyclers" in the United States to Asia — where valuable metals are stripped with no regard for health or the environment. Leftovers choke waterways - or go up in smoke.

CHRIS JANKOS, US DIVISION MANAGER, HMR: Stuff ends up overseas because typically you're going to get a better price for it overseas. The commodities market here in the US is not very high. Most overseas, or developing countries overseas, they need this product, they need the raw materials basically. And it's very expensive to buy raw materials, raw copper and aluminum and so forth. And the labor is cheaper there. So they're used to buying it and recovering all those metals.

HARRIS: HMR and other US companies say they make sure any computer parts that leave their hands for Asia or anywhere are properly disposed of. They get documentation and visit factories. But at the non-profit Alameda County Computer Resource Center, the founder laughs. He says it's impossible to verify where shipping pallets of computers go.

JAMES BURGETT, FOUNDER, ALAMEDA COUNTY COMPUTER RESOURCE CENTER: I sell a pallet of computers to Joe. Joe sells a pallet of computer to Fred. Fred pulls the hard drives out, sells the hard drive to Bill, sells the rest to Tom. Tom then turns around and says, oh, well, I'm a circuit board guy. He pulls out all the circuit boards out and sells the cases off to Bill. Okay, Bill goes, well, I'm a plastic guy, I pull the plastic off the front and send the steel off to Frank. Now, after about the first two tiers, I have no way of telling where that stuff went.

HARRIS: The long run solution, environmentalists say, is to push manufacturers to make electronics with fewer hazardous materials. Some say a recycling fee paid when you buy a computer would create an incentive to make clean computers — if that fee depended on how many toxics were inside.

MARK MURRAY, EXECUTIVE DIRECTOR, CALIFORNIANS AGAINST WASTE: The more hazardous material in the device, the more you're gonna pay. We need to get manufacturers to reduce the amount of lead, reduce the other toxics that are in the devices. And that's gonna ultimately reduce the cost of managing this waste.

RENEE ST. DENIS, BUSINESS MANAGER, PRODUCT RECYCLING UNIT, HEWLETT PACKARD: We make products that consumers want. So, we don't put toxics in there just for fun. If there's a toxic material in a product, like the glass in the CRT that has lead in it, it's there for a good reason. A good technical reason. For example, to shield the user from the x-rays. We know that there's lead in circuit boards. But that tin solder that has the lead in it, is the best technology for those kind of products. So, we do that in order to meet the needs of the customer in terms of the technology they want, at the price point they want. We don't just do it capriciously.

HARRIS: At Hewlett Packard's recycling center, a machine swallows whole computers. It chews them up and spits them out into separated streams of metals and plastics, ready for reuse. The company opened this center six years ago, after a report on the problems old computers cause in Asia. Nonetheless, a recent expose by environmental groups found HP products there again.

ST. DENIS: I was a little disappointed. Because I wish more people knew about the service we offer, so that HP products didn't have to contribute to that issue over in Asia. But I understand the realities, that not everyone is going to know about this program all at once.

HARRIS: In fact, ninety five percent of what is processed here comes from Hewlett Packard's own discards.

The mountains of electronic garbage are rising all the time. Computers aren't the only problem.

MARK MURRAY, EXECUTIVE DIRECTOR, CALIFORNIANS AGAINST WASTE: Computer monitors right now, and TVs are the tip of the waste-berg. But there's lots of other electronic waste out there that potentially causes a problem. The mercury in floruescent lamps, the mercury in flat screen TVs and in computer monitor screens. There's cadmium in the batteries in most personal electronic devices and cell phones. We know we're going to have to deal with them both as solid waste and hazardous waste in the future.

HARRIS: And why?

ST. DENIS: They make my life better. They make my life more fun. We have a video game. So it's something fun to do in the evening. There are TVs in every room bc I want to have the TV on when I'm doing other things. There's a computer because it's my main source of information in my day to day life. I have a handheld version of that so I can take a lot of personal information with me on the road. I have a cell phone to stay in contact with people. And I have various output devices so I can make hard copies, photos, and all the fun stuff I can make with my computer.

I think it is human nature. We always want the newest. We want the best. We want the latest.

JAMES BURGETT, ALAMEDA COUNTY COMPUTER RESOURCE CENTER: IBM, HP, Compaq, these machines are built to be thrown away. At the very best, they're built to be recycled in an industrial process where you just take a machine, render it for its parts and then maybe remanufacture another machine our of the parts.

Build a machine that somebody can use for ten years. Because if you get us a machine that's reliable for ten years, I'm going to come back and get another machine. Ten years from now you've got my market. You sell me a machine that's good for 18 months, 18 months from now I'm going to be looking for a better machine. And quite frankly I'm going to be looking for another brand name.

MOYERS: Already some 70 million computers already have been sent to landfills. In another five years, 500 million more computers will be joining them.

That's right, 500 million more castoffs haunted by toxic ghosts.

If you would like to know more about what to do with your old computer or your televisions set, and about organizations like the basel action network which are trying to shed light on the problem of E-waste, go to pbs.org.

ANNOUNCER: And now a look at stories coming up on NPR radio this weekend.

JACKIE LYDEN: Hi, I'm Jackie Lyden.

Join me on the radio this weekend on ALL THINGS CONSIDERED from NPR News as an Irish castle offers up its secrets: kings, ghosts and a colorful castle keeper.

And Harlem recreates its golden days in a new play called HARLEM SONG.

You'll meet members of the cast and get a feel for the show.

In the next segment on NOW you'll meet the director.

Find your local public radio station on our web site: www.npr.org and tune in.

MOYERS: Earlier this week some of our NOW team dropped by a preview performance of an ambitious new musical being readied for opening night here in New York. HARLEM SONG is not happening on Broadway or Off-Broadway, but uptown on 125th street at the storied Apollo Theater in the heart of Harlem.

I'll show you a bit of the performance in a moment, but first, let's meet the man behind it. The writer and director of HARLEM SONG is one of our city's leading artistic figures, George C. Wolfe.

His directing credits include ANGELS IN AMERICA, BRING IN 'DA NOISE, BRING IN 'DA FUNK — both of which won him Tonys — and the current hit, TOP DOG UNDERDOG.

He's also the producer of the Public Theater and the New York Shakespeare Festival; quite a Big Apple agenda for a kid from Frankfurt, Kentucky. Welcome to NOW.

GEORGE C. WOLFE: Hi.

MOYERS: you could have had your choice of theatrical possibilities.

Why Harlem?

Why HARLEM SONG?

And why now?

WOLFE: One, it's so great being in that community, because when the community feels very Southern in...

MOYERS: Harlem, New York?

WOLFE: Absolutely. There's this whole life on the streets. I mean, people speak to you whether or not they know you or not, which is a very Southern thing. And so that happens somewhat in New York, but it happens all the time in Harlem, if you will. And the rhythm is both New York and it's also slower.

And I don't mean that in any way other than that there seems to be a rhythm that allows for conversation, there seems to be a rhythm that allows, "So how are you?" and "What's going on?" and "What's new?" So, it's very fascinating.

MOYERS: The excerpt we have resonates with me as you speak.

Let's watch it.

WOLFE: Okay, absolutely.

[VIDEO EXCERPT]

ACTRESS SINGING: Our strolling has taken us to the corner of Second Avenue and 127th Street.

Steps away from the theater and the Tree of Hope. Oh, look.

There's Paul.

And his wife.

Hello.

As I was saying, the Tree of Hope is a symbol to all of Harlem.

Why all any out of work writer, singer or hoofer has to do is touch it.

And overnight all that was wrong gets made right. A miracle, you say.

Maybe a sham.

But like I always say, another day, another scheme, another dream in Harlem.

Andy's real dandy in chatting with fats while Bessie she bellows and louis, he scats, as we stroll.

Well all right then.

Well, all right then

Well all right then well, all right

MOYERS: I see the strolling, which we used to do in the South...

WOLFE: Exactly. Exactly.

MOYERS: But there's something about the rhythm that is New York.

WOLFE: Exactly. Very, very so.

I mean, there is.... That sequence was based on the idea that on Sunday afternoon up and down Seventh Avenue all the people would gather around and they would stroll, and there would be a mixture of, like, the celebs of Harlem, if you will — Paul Robeson and Langston Hughes — but also it would be a chance for all of the people who worked in the lower classes, if you will, to dress up in their finest and to stroll and promenade with the most elegant. So there's a line which he says, "Now tomorrow morning it's a whole other case, with folks chasing about out to uplift the race. But on Sunday, we saunter and slow down the pace, as we stroll."

So it's a chance for all of Harlem in the '20s to dress up and show that they had New York style and to do it in a slow, southern, elegant way.

MOYERS: What about the Tree of Hope? It keeps repeating itself throughout the review.

WOLFE: It was in front of the Hoofers Club, and people would go out there and knock on it, and

seconds later they would get a job dancing or performing somewhere.

So that was the mythology.

And so at one point a car hit the Tree of Hope and it was knocked down and this happened in the late '30s or '40s when Harlem was going through an uncertain economic period. So I found it just very fascinating just what happens to a community when one of its symbols gets destroyed.

And where does that... If you no longer have that symbol, does the hope go along with the embodiment of that symbol?

MOYERS: Is this the... I'm told that on Wednesday night they have amateur night at the...

WOLFE: Exactly.

MOYERS: ...Apollo Theater, there's a piece of a tree that's brought...

WOLFE: That's a part of the tree of hope, so that, therefore... So it was destroyed, but it lives on in a stump on the Apollo stage. So every single time people go out there to try to win at the Apollo night, they go up and knock on the tree.

So that something that started back in the '20s is still alive and very much so present in this new century.

MOYERS: When I see your review, when I listen to the blues or jazz, I'm faced with this contradiction: How did the art of an oppressed and despised people become so dominant in the imagination of the people and the majority culture that had oppressed them?

WOLFE: How could it not? I mean, in many respects, because I think that ultimately in life you end up learning more about yourself when you're having a difficult time than when you're having a party.

When the world is loving you, all you learn is how to be loved.

When you're facing obstacles in your life and you have to go through journeys, you end up finding rhythms and truths inside yourself that you need to in order to survive.

And the fact of the matter is that the human condition is more often than not looks to art to find out how to survive and to how to get past those moments that are incredibly very difficult. So you have a culture that spends 400 years enslaved, and so every single thing that it created was about enduring, was about surviving.

To me, the thing which is so fascinating, sort of the first generation out of slavery invented jazz, which is just astonishing.

So once those psychological, and, if you will, the literal chains were released, the jazz was created.

And I think that jazz is really fascinating because more than any other art form, I think it articulates the ambiguity of the human condition, which is, "I'm happy, sad; I'm lost, I'm confused; I'm going forward."

MOYERS: Do you think you can get people to come up to the Apollo, up to Harlem, to spend money?

WOLFE: Absolutely. They're coming up there now. They're coming up there to see the show.

Harlem is an extraordinary community, and it is a part of Manhattan, so let's psychologically join it to Manhattan.

MOYERS: Someone told me that Japanese tourists in large droves come up to...

WOLFE: Yes, I think it's the second destination for Japanese tourists in New York city now.

MOYERS: How do you explain that?

WOLFE: Because the world celebrates, you know, something that we don't always necessarily celebrate.

I mean, the fact of the matter is when you speak about black American culture, black American culture is not just a black American culture, it's a world culture.

Regardless of where you go, on the smallest island in the smallest country, you're going to hear jazz, you're going to hear rhythms, you're going to hear hip-hop.

So it's a world culture.

And I think that the rest of the world knows it, and I think a lot of people in this country know it as well.

MOYERS: And why is Harlem the center of that culture?

WOLFE: Well, simply because I think historically it was a large block of land where black people could be completely and totally in control of their fates, or if not in complete, the illusion that they were completely in control of their fates.

And also the legacy, and it was just like, you know, if you...

If someone makes a noise, and other people join in the noise and other people join in the noise, and then you create this symphony of dreams and visions that are... And I think that's what Harlem became.

So more people even to this day, people keep on coming and coming because it still has the aura of possibility.

MOYERS: You're two weeks away from opening.

WOLFE: Yes.

MOYERS: August 4?

WOLFE: August 4.

MOYERS: Are you still working on it?

WOLFE: Oh, absolutely. Please. You know, art is either growing or it's not. So you're either fixing it or it's dying. So I think that hopefully I will continue to work with my team and we'll build the show, and then after the artists will continue to allow the show to grow once they infuse it with.... Once they know the parameters of the show, then they'll be allowed to soar with them as well.

MOYERS: Are you still writing songs?

WOLFE: We're working on one right now called "Harlem Song."

Actually, which is all about how jazz went out and conquered the world.

So it's exactly somewhat of what we're talking about.

I'm working on the song right now.

MOYERS: Do you wake up in the middle of the night and say, "I need to change this," or, "I've got a new inspiration for a new tune"?

WOLFE: Wake up in the middle of the night?

Do I go to sleep?

It's haunting.

This show is just with me all the time, and sometimes I find myself, when I'm dreaming or when I'm sleeping, you know, I'm still working out a rhyme scheme.

Half of "noise/funk," I would go home each night and I would fall asleep and i'd literally... I would dream a sequence from that show.

It was the most fascinating thing.

So it's not happening the same way, but ideas and dreams, ideas and rhythms and thoughts live inside my dreams sometimes when I'm working on a show because the piece so permeates my...

Whatever — my being, if you will.

MOYERS: Do you wake up and write them down?

WOLFE: Yes, I wake up exactly because if I don't, it's gone, and the... And you may wake up in the morning and in the middle of the night and scribble something down and it may not be what you end up with, but somewhere buried in there is a germ of a possibility of an idea that then will shape into something else.

MOYERS: There's no answer to this question, but I ask it anyway.

I once did a series on creativity, and I still didn't answer the question.

Where do these ideas come from?

Where does your passion rise from?

Where does the imagination find its root?

WOLFE: I think it comes from.... I think so much of creativity comes from the images and the impulses of childhood.

I think that how you play, what sort of play that you engaged in as a child, what sort of dreams you have, I think it's just living somewhere stored inside of you.

And then as you go on, other textures and other rhythms and other dynamics of pain and discovery and loss get added into that phenomenon and then you add craft to it.

So I think as a child, I think I had a very sort of... I watched a lot... I think I had a very wicked sort of sense of humor.

I think I was always crafting realities, if you will.

So I think that so much... So that still in my work that I think that energy is very much still present, and then my life experiences have informed that, but I think the impulse, that understanding of the world, and then spark of play, comes from childhood.

MOYERS: Was there a Tree of Hope in Frankfurt, Kentucky, when you were growing up?

WOLFE: I think the tree of hope, it was... Growing up in a segregated community was... I was insulated, so I was protected from whatever the ugly aspects of segregation were. And I was protected from that by a very intense, very healthy, very dynamic black circle of, like, the church, the school, and my relatives and my grandmother.

Yes, I suppose if there was a tree, it would be my grandmother.

MOYERS: I knew you were going to say it.

WOLFE: It would be my grandmother, because she was my force, my protector. And also I think that being part of the first generation that was going to be a part of integration, I was and all my friends were indoctrinated with this incredibly — probably in retrospect — exaggerated sense of cultural significance.

So, therefore, when we went out into the fields, if you will, we were ready.

So, therefore, we were not negotiating a relationship with racial inferiority. In fact, the exact opposite was going on. We were so pumped up, if you will, to know that a black man did this, and a black man did this, and you did this, and you... Therefore, you can do the thing, you must do this.

So it was all those forces were driving... Still drive me to this very day — not necessarily just in the boundaries of race, but to knock down barriers.

MOYERS: Well, thank you very much, George Wolfe, for being with us here on NOW. And I'll be looking forward to the opening of HARLEM SONG.

WOLFE: Very good. Glad to be here.

Thank you.

MOYERS: That's it until next week. For NOW, I'm Bill Moyers.

Remember, pbs.org is waiting for you. And we'll leave you with another taste of the music from HARLEM SONG.