'The State of Working America'

DATE January 4, 2005 ACCOUNT NUMBER N/A
TIME 12:00 Noon-1:00 PM AUDIENCE N/A
NETWORK NPR
PROGRAM Fresh Air

Interview: Jared Bernstein discusses "The State of Working America
2004-2005," a report he co-authored
TERRY GROSS, host:

This is FRESH AIR. I'm Terry Gross.

How are working families doing in the current economy? That's the subject of
the new edition of the biannual report, "The State of Working America," a
project of the think tank, the Economic Policy Institute. Later this month
Cornell University Press will publish the report in book form. My guest,
Jared Bernstein, is a co-author of the report. He's a labor economist who
joined the Economic Policy Institute in 1992 and took a leave to serve as
deputy chief economist at the Labor Department in '95 and '96 under President
Clinton.

The Economic Policy Institute, which was established in 1986, describes its
goal as broadening the discussion about economic policy to include the
interests of low- and middle-income workers. Bernstein says that the US
economy is in recovery, but the benefits are not reaching workers and
families.

This has been referred to as a jobless recovery. Would you still describe it
that way?

Mr. JARED BERNSTEIN (Labor Economist): Not at all. In fact, I think one of
the more positive aspects of the recent recovery is that starting last fall,
we began adding employment month by month. I don't think we've had a negative
month for over a year. The problem is that the job growth has been a bit too
tepid. Too often when we look at this question of whether jobs are growing or
not, we're simply asking, `Are we adding jobs or losing jobs?' That's too weak
a criterion to evaluate the strength of the labor market. We need to not only
add jobs, we need to add at last a hundred and fifty to 200,000 per month.
And unfortunately, months like that have been the exception to the rule.

GROSS: Why do we need to add a hundred and fifty thousand to 200,000 jobs per
month?

Mr. BERNSTEIN: We need to add that many jobs per month in order to absorb all
those people coming into the job market looking for work, as well as rehiring
the millions who were laid off over the course of the recession and the
jobless recovery. If we don't add that many jobs, the unemployment rate won't
fall very much. And, in fact, I think it's telling that the unemployment rate
was 5.6 percent when this recovery began in November of 2001, and most
recently, it's been around 5.4, 5 1/2 percent. So we've actually made very
little progress in terms of lowering unemployment, even while we're adding
jobs.

GROSS: So you're saying that we're really no longer in a jobless recovery.
Jobs are being created. Is there any pattern you see in the types of jobs
that are being created?

Mr. BERNSTEIN: In fact, I'd say the patterns are evolving. When the jobless
recovery ended in the fall of 2003, we started adding employment. We had a
job quality problem, and, in fact, you think back to the election, you heard
candidate Kerry talking about how the new jobs paid so much less than the old
ones, and he was talking about a problem in the quality of the jobs that we
were creating. And, in fact, on average, industries that were adding jobs
paid considerably less than industries that were shedding jobs or growing more
slowly. Things have improved a bit, and so I think that the quality of jobs
we're adding now, by many dimensions, are OK.

But one area where we still have a problem has to do with health care and
pensions. Jobs that are being created now are far less likely to come with a
more broad compensation package, including a decent health-care program or a
pension program, and in that sense, those jobs are of poorer quality.

GROSS: Now is this happening across the board or is it, you know, only
specific types of jobs?

Mr. BERNSTEIN: You know, it's not happening across the board in the following
sense. Those at the very top of the income scale have been doing far better
than the rest. If you look at the trends in profits and compensation, you
will see a very unique and unbalanced characteristic of the current economy.
The rates of profit have really soared while compensation has been pretty
flat. So while the economy's been growing, going back to our earlier
discussion, there is an ongoing recovery under way--while the economy's been
growing, most of the benefits have been flowing upwards. So how you've done
really is largely a function of where you are in that income or wealth scale.

GROSS: What do you mean the benefits have been flowing upward? Can you give
us an example of what you mean?

Mr. BERNSTEIN: Sure. Historically at this stage in a recovery, most of the
growth of the economy is flowing into compensation; say about 70 percent of
the growth goes to wages and compensation, and about 30 percent goes into
profits. Well, this time it's topsy-turvy; about 70 percent of the growth has
gone to profits, and only about 30 percent into compensation.

GROSS: Is there any explanation for the trend that you've just described,
where more money proportionately is getting put into profits than into wages?

Mr. BERNSTEIN: I think the explanation really lies with the job market.
Really, at the heart of this analysis is the notion that our labor market
serves as a mechanism to distribute the economy's growth. The economy has
been growing quarter after quarter, year after year. But unless the
unemployment rate is far lower than it is today, unless we're creating many
more jobs than we've been creating, unless we're really hammering away at that
jobs deficit, we can't expect the benefits of growth to be broadly shared.
They tend to flow upward.

It really is almost as simple as an employer who's facing a very tight labor
market has to raise wages and compensation to get and keep the workers that
they need. On the other hand, when the line of labor supply is forming
outside the shop or the factory and there's lots of people seeking work--that
is, there are more job seekers than there are job slots--that tends to put
downward pressure on wage growth for many workers, and it leads to higher
levels of inequality. This is, I think, the result that we're seeing, really,
played out in today's economy.

GROSS: Outsourcing is a word that Americans are becoming increasingly
familiar with, and a lot of jobs that used to be done by workers here are now
being done by workers in Bangalore, India, or other parts of the world. Have
you crunched the numbers for outsourcing, and if so, what do they have to tell
us?

Mr. BERNSTEIN: Well, I've certainly reviewed all those numbers, and,
interestingly, they don't have a whole lot to tell us because it's very hard
to know how many jobs have been outsourced or offshored. But let me say what
I think we do know about it. First of all, for decades we've been outsourcing
employment in our manufacturing sector, and that's really led to the loss of
millions of manufacturing jobs in this country. I think what's caught
people's attention in recent years is that that phenomenon has crept up the
scale, as it were. It's no longer affecting solely blue-collar workers. It's
now affecting white-collar workers as well. And that's certainly a different
trend and one that I think many have found alarming.

GROSS: You know, a question you've raised is this--you know, a lot of people
say, `Well, what we need--what workers really need now is better education and
job retraining, so that workers who have lost jobs can find new jobs and be
trained appropriately for those new jobs.' And you question whether that's
really the issue right now.

Mr. BERNSTEIN: I do, and I don't. I mean, I--certainly the idea of any
individual seeking a higher level of skill or retraining makes sense for that
person. However, there's a way in which this conversation, I think, gets very
skewed, especially in the context of offshoring. You hear many economists
talk about we simply need to reskill in order to be more competitive, but the
people that they're talking about are some of the most skilled in the world.
So, for example, if you talk about radiology, the idea that because we can now
offshore these digital photos, X-rays and the like, hospitals can use
radiologists in India and China, whereas before they didn't have that option.
And that, of course, dampens the employment opportunities, the compensation of
radiologists here. So, you know, the typical economist might say, `Well, that
radiologist needs to become a pediatrician. That's a job that obviously can't
be offshored so quickly.' But the idea of retraining a radiologist to become
a different type of doctor raises this notion of training--raises the bar to a
level we've never contemplated in our country.

I mean, the training that we've done has always been on the low end, trying to
provide the skills that, say, you know, high school dropouts need to make
their way into the job market. So there's a kind of hand-waving that goes on,
I think, when we talk about skilled training that doesn't really deal with the
realities of the offshoring challenge.

GROSS: You know, because so much manufacturing and so many services have been
outsourced to other countries, where labor is cheaper, it means that some o f
the things we buy and some of the services we use are cheaper here. So does
the average worker lose or gain in the long run, do you think? You know, on
the one hand, you stand to lose your job. On the other hand, the stuff you're
buying is cheaper. Like, can you figure out how that balances out?

Mr. BERNSTEIN: Well, you're absolutely right to raise the plus side of the
ledger, which is that thanks to all this globalizing, prices certainly are
rising less quickly than they have historically. And probably the best way to
measure out the costs and benefits of that is to actually look at
inflation-adjusted growth of income and wages because that takes into account
these price changes. And if you look since, say, the year 2000, you'll see
that the typical family is actually about $1,500 worse off in real terms;
that's about a 3 percent decline in their income. If you look at the
low-income family, they're 6 percent worse off, so their losses have been
twice as great.

So even taking into account slower price growth, incomes for many of these
families has grown more slowly. Now part of that is because we've been
through a recession, jobless recovery. But here we are three years into an
economic recovery that, according to many commentators, has been pretty
robust. Yet many families are behind where they were just a few years ago.

The reason why incomes have grown much less quickly at the bottom has to do
with this notion of inequality, the idea that the growth in the economy has
been funneled much more to those at the top than those at the bottom. There
are a set of factors that have determined that result. We talked about the
weak job market as one of them, but other factors include a decline in the
minimum wage, less union power, more globalization. All of those factors have
led to that outcome.

GROSS: Now you mentioned, though, the decline in the power of unions as being
one of the reasons why a lot of workers haven't kept up with the cost of
living. Is there a way of measuring how much the power of unions has declined
and what the percentage is of workers who are unionized compared to 10, 20, 30
years ago?

Mr. BERNSTEIN: Well, right now about 9 percent of the private-sector work
force is unionized. It's closer to 14 or 15 in the total work force because
the public sector has about a third unionization rate. But if you look at the
private-sector job market, it's about 8 or 9 percent. And if you go back to
the heyday of unions, it was probably closer to 30 or 40 percent, something in
that range. Now part of that has to do with the loss of manufacturing jobs.
I mean, manufacturing is a sector that's historically been highly unionized,
and we've lost millions of manufacturing jobs over the past few decades. So
that by itself has diminished union power. Now unions have tried to make
inroads into the services, and they've actually done pretty well. The Service
Employee Union's, I believe, is one of the fastest-growing unions. But
certainly union power has diminished over the past few decades, and that's
helped lead to these increased inequality results that I've been describing.

I would say one of the main factors that determines the distribution of the
economy's growth and thereby explaining why that distribution has been so
unequal in the past few years has to do with the bargaining power of the work
force. Economists are typically taught that each worker is paid commensurate
to their skills and to their productivity. So if you're creating a certain
amount of wealth or value, that's what you're going to get in your wage. But
in the real world, I would say an equally important determinant of how much
you end up getting paid is the kind of bargaining power you might have. That
may have to do with whether you're male or female, whether you're a minority
or white worker, whether you're at the top end of the management skill or at
the bottom. It has to do with factors: whether you're in a union, whether
you're in a state with a higher minimum wage, etc.

All of these bargaining power factors play a role, and they've been diminished
for many in this work force, really, over the past few decades. And that's
one of the reasons why we've seen inequality on the rise.

GROSS: My guest is Jared Bernstein. He's a senior economist with the
Economic Policy Institute. He co-authored the institute's new report, "The
State of Working America." We'll talk more after a break. This is FRESH AIR.

(Soundbite of music)

GROSS: If you're just joining us, my guest is Jared Bernstein. He's a senior
economist with the Economic Policy Institute. And he's co-author of their
annual report, "The State of Working America," and the newest version of
that, "2004-2005," is about to be published in book form.

Let's take a look at Social Security. The Bush administration says that we
have a $10 trillion shortfall in Social Security and that this is threatening
the entire system and causing a crisis and that the cost of doing nothing to
reform the system would be greater than the cost of acting now to change it.
The way you crunched the numbers, does that conclusion fit with your analysis?

Mr. BERNSTEIN: Well, not only does it not fit with my analysis. It doesn't
fit with the analysis of the Social Security actuaries themselves, which may
not be the most exciting group of people to raise on a radio show. But these
actuaries have said that that kind of an estimate, that $10 trillion, I
think--they use the word, and I quote, "misleading" because $10 trillion
deficit is the deficit in Social Security over an infinite horizon. If you
took any branch of government, any program--if you looked at the military, if
you looked at social spending--you'd find deficits that were equally large, if
not larger. So it's really a meaningless number. Social Security is not in
crisis. There is a problem with funding the program, and historically such
problems have evolved in the past, and we fixed them with fairly minor tweaks.
This one could be fixed similarly.

GROSS: What effect on different income brackets do you think privatizing
Social Security would have?

Mr. BERNSTEIN: Well, that's an important question because so much of our
conversation has focused on this notion of economic inequality. One of the
things that many of us like best about Social Security--and I guess you could
say many of the privatizers like least--is the fact that it's actually a
pretty progressive program. Those at the lower end of the income scale do
better with Social Security than those at the higher end. If you privatize
the system, it--almost assuredly you would really kill that progressive
component and end up with a program that would reinforce inequalities. I
mean, think for a second: Who would do better in a program where you manage
your own stock portfolio? Those at the top of the income scale, who have the
time and the knowledge--or at least can hire the people with the time and the
knowledge--to do that, or those at the bottom who, you know, typically don't
have, A, the experience, know how to necessarily manage stock portfolios or,
B, have the savings that they can really put into it, even with this diverting
their payroll taxes into private accounts.

GROSS: President Bush has already cut trillions of dollars' worth of taxes
and proposes to cut a few trillion more, and he says the cuts are helping the
economy. How do you measure if the tax cuts are helping workers?

Mr. BERNSTEIN: One of the best ways to measure whether the tax cuts are
helping workers is to actually hold the Bush administration accountable for
their claims regarding these tax cuts in terms of job growth. When the
administration introduced their tax cuts, they argued that these tax cuts
would create something like 300,000 jobs per month from the middle of 2003
through the end of 2004. Well, in fact, they've had one or two months with
job growth of that magnitude. So in terms of job growth, the tax cuts have
clearly been a failure.

In terms of economic growth, I think they have helped boost the rate of growth
in the economy. GDP would have grown more slowly in the absence of these tax
cuts. But while these tax cuts have helped generate faster economic growth,
the fact that they've never achieved the job or wage or income growth that
they were advertised has meant that they really haven't delivered the goods to
working families. Furthermore, if you look at who did benefit from the tax
cuts, of course, it's been widely documented that the benefits flowed, once
again, to those at the top of the scale. The top 1 percent ended up with
something in the $80,000 range in terms of their lowered tax liabilities from
these cuts. Those in the middle maybe got about a thousand dollars. Those at
the low end got about a hundred dollars.

GROSS: When you're thinking about the long-term impact of the tax cuts, do
you take into account the possibility that perhaps we haven't given enough
time to see what the long-term beneficial effects of the tax cuts will be,
that it's maybe just too soon to tell and that the benefits will--more
benefits will appear in the future?

Mr. BERNSTEIN: Well, possibly, but I don't think so. I mean, the tax cuts
actually did help the economy grow more quickly, and that's--you know, you
could see that already in some of the numbers from the period when they were
implemented. The long-term effect from the tax cuts was advertised to be
greater investment. This is supply-side economics. If you cut the taxes of
those at the top of the income tax, they will invest more, and this will lead
ultimately to faster productivity growth. Well, you know, the investment
results certainly don't show that to be the case, and there's no reason why
that shouldn't show up in the short term. And, in fact, interestingly,
productivity growth was growing quicker before the tax cuts than it has been
since.

So, really, I think the long-term effect of these tax cuts will simply be a
more unequal, post-tax income distribution. That's an effect that I think we
will see in the long term. I don't think anyone could seriously argue that
they'll be growth-enhancing in the long term. And, by the way, the
Congressional Budget Office has analyzed just that and came to the same
conclusion.

GROSS: There's always been differences in how economists analyze and
interpret the economy. But I'm wondering if you think those differences have
widened as America seems to have become more divided politically.

Mr. BERNSTEIN: Mm-hmm. You know, I think they have widened. I think if you
look back at the last, say, four years of the Bush administration--but you
could even find this in eight years of Clintonomics--there's been a prevailing
view that free markets always yield the best result. I would say, you know,
the difference between, say, Clintonomics and Bushenomics is not so much the
support for free-market economy, which is really very robust in both cases.
But in the Clinton case, it says, `Let the economy do its thing, and we'll
redistribute a bit to help the losers.' And in the Bush case, it's, `Let the
economy do its thing, and whatever happens, so be it.'

In fact, really, if you go back to another era of economic thinking, say, that
much more associated with older Democratic politics or Roosevelt economics,
this was a view that said market outcomes are not always the best outcomes and
that there are ways to intervene in market outcomes to ensure that we have the
economy that we want and the distribution of income that is fair and
equitable. And so it doesn't necessarily accept the notion that the free
market, left alone, is always the best way to run things. I think that has
been, really, too widely accepted over the past few decades.

GROSS: Well, Jared Bernstein, I want to thank you so much for talking with
us.

Mr. BERNSTEIN: Thank you.

GROSS: Jared Bernstein is senior economist with the Economic Policy
Institute. He co-authored the institute's new report, "The State of Working
America 2004-2005." It's about to be published in book form by Cornell
University Press.

I'm Terry Gross, and this is FRESH AIR.

(Soundbite of music)

(Announcements)

(Soundbite of music)

GROSS: Open in as many theaters as possible and make a lot of money quick
before the film bombs. Coming up, we discuss how blockbusters are marketed
with Dade Hayes and Jonathan Bing, authors of "Open Wide." And critic Lloyd
Schwartz considers the music in the new DVD collection "More Treasures" from
American Film Archives.

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Interview: Dade Hayes and Jonathan Bing discuss their book "Open
Wide: How Hollywood Box Office Became a National Obsession"
TERRY GROSS, host:

This is FRESH AIR. I'm Terry Gross.

A blockbuster movie requires blockbuster marketing, and marketing strategies
are now affecting what movies get made, how they're made and where they're
shown. My guests, Dade Hayes and Jonathan Bing, spent several years
chronicling the film business for Variety, where they're now editors. Hayes
and Bing have written a new book called "Open Wide: How Hollywood Box Office
Became a National Obsession." The book examines how big-budget movies are
marketed by focusing on three that opened last year on July Fourth weekend:
"Terminator 3," "Legally Blonde 2" and the animated film "Sinbad."

A lot of your book is about the pursuit of getting a big opening weekend box
office. And of course, on July Fourth, since it's summer vacation and a
holiday, a lot of people are available to go to movies, so you could get a
particularly big opening weekend if you're lucky. Why is there such a big
emphasis in Hollywood on having a big opening weekend? What does it matter?

Unidentified Co-author #1: Well, one of the most important reasons for this,
this fetish for opening weekend, is that films have such short shelf lives,
especially the big blockbusters that are the subject of the book. I read in
The New York Times a couple of weeks ago that Oliver Stone said that he'd
worked for three years on the movie "Alexander" and it was over in three
weeks. These films come along and they have a wide opening; they open in
thousands of theaters around the country. And within a few weeks, the world's
forgotten about them and they're on to the DVD.

Unidentified Co-author #2: And the number becomes a sales tool; you know, the
number becomes a commodity that you can actually promote. That's what's
happened in the last, you know, 20, 25 years is that "Spider-Man" does 114
million in its first three days, the original film, and that becomes the
event; that becomes the thing that people want to participate in. And it
plugs right into this fascination with batting averages and stock quotes and,
you know, all these kind of bits of essentially trivia, but it kind of
commodifies the moviegoing experience in a way that people can understand and
that the marketers can, you know, try to deliver on that level.

GROSS: If you want to get a big gross on the opening weekend, you have to
open in as many theaters as possible or `open wide,' as the expression is and
as the title of your book goes. And opening wide has a new meaning now that
there's megaplexes that have, you know, 15 or 30 theaters in one complex.
So how has the existence of megaplexes changed how films open and what the
meaning of opening wide is?

Unidentified Co-author #1: Well, we chronicle in the book this phenomenon
that came to be called the rescreening of America in which giant
megaplexes--and `megaplex' is defined technically in the trade as a theater
with more than 16 screens--were built across the American suburbs. And we
focus on one suburb in particular, Ontario, California, which is about a half
an hour's drive outside of LA, where there are two megaplexes next to each
other, one with 30 screens, one with 22 screens. And at the height of the
summer, blockbuster season, there's really nothing but blockbusters playing on
these 52 screens. You won't find a single independent or, quote-unquote, "art
house" film playing in this theater--in either of those theaters. And so in a
very direct way, it's limited the choices of American moviegoers.

GROSS: That's so counterintuitive. You'd think 52 theaters in one little
area--well, we'd be able to see everything in those theaters. So how come it
has the reverse effect?

Unidentified Co-author #2: Well, it's kind of down to media consolidation.
It's the same battle that's happening on cable television where, you know,
it's the old line about, you know, a hundred channels and nothing's on,
because all the same conglomerates are controlling those vertical, you know,
revenue streams. And so, you know, you have this cluster of theater companies
that dominate the landscape. About five circuits own 85 percent of all movie
screens in America.

And it's about convenience, which is an interesting aspect to this. It's part
of, you know, just plugging this whole theater thing into the retail
infrastructure and being able to offer show times every 10, 15 minutes so
that, you know, once you're kind of in that cocoon of shopping and eating and
consuming, you know, you'll be able to just sidle up to the line and buy a
ticket anytime you want to see a movie.

Unidentified Co-author #1: And, Terry, I thought it was important to add that
it's really--opening wide is really the name of the game, and this year films
were opening wider and wider. In our book we chronicle the global release of
the third "Matrix" film, which was released in something like 18,000 prints
around the world. And in a kind of curious publicity stunt, they released it
at exactly the same fixed moment in time in every territory around the globe.
This past summer, there were films like "Shrek 2" which opened in 4,000 movie
theaters, an unprecedented level of saturation for Hollywood.

GROSS: This campaign for "Matrix Revolutions" of opening simultaneously, at
the exact same second in movie theaters around the globe, was actually very
effective. What was the thinking behind it?

Unidentified Co-author #2: Well, it was trying to create a publicity gambit,
a gimmick, you know, and that goes back to the very origins, you know, of
these showmen producers, you know, guys like Joseph E. Levine that we talk
about in the book who--he was the impresario, the marketing genius, really,
behind movies like "Hercules" and "Godzilla" where you kind of create this
spectacle. And who cares, you know, how decent the movie really is as long as
you just pack the theaters in those very opening show times? And that was
really all it was. They kind of knew what they had on their hands. They
decided to stage this, you know, incredible spectacle in the global
marketplace, which is something we only gesture to because there's just not
room for it, but it really has matured pretty dramatically. I mean,
territories like Russia, Indonesia, places that you would never even think,
have 20-screen movie theaters just like we do here in the suburbs in America.
So that's another growth area that also played into the "Matrix" opening.

Unidentified Co-author #1: And I'll just add that it's a dirty little secret
of the movie business that if you open a film in thousands of theaters
simultaneously, chances are that you can generate a lot of money quickly
before word gets out just how bad the film is. And with that third "Matrix"
film, the reviews were just awful. But within the first three days, the film
had generated practically $200 million around the world. So, you know, the
smell can't really get out quickly enough when the film is opening everywhere
simultaneously and people are--and there's just a mad rush to see it on
opening night.

GROSS: My guests are Dade Hayes and Jonathan Bing. They're editors at
Variety and authors of the new book "Open Wide" about how blockbuster movies
are marketed. We'll talk more after a break. This is FRESH AIR.

(Soundbite of music)

GROSS: If you're just joining us, my guests are Dade Hayes and Jonathan Bing.
They're the authors of the book "Open Wide: How Hollywood Box Office Became a
National Obsession." And Dade Hayes is managing editor of special reports at
Variety; Jonathan Bing is deputy managing editor at Variety.

In your new book, you follow three films: "Terminator 3," "Legally Blonde 2"
and the animated film "Sinbad." So two of those films are sequels,
"Terminator 3" and "Legally Blonde 2." Why are sequels so potentially
lucrative?

Unidentified Co-author #2: They can be repeated again and again and again
over various platforms: video games, toys, DVDs. They're doing
direct-to-video DVD sales that would just blow your mind in animation. Some
suggested that "Sinbad" should have gone direct to video; it would have made a
lot more money. It's just an amazingly kind of systematized, industrialized
process that fits perfectly into the MBA kind of models of the conglomerates
running the studios. They want widgets. They want, you know, parts that they
can stamp out again and again and again. And, sure, they understand that the
movie business isn't for the faint of heart, but they also want to inject some
predictability and some kind of familiarity into the process.

And they've also kind of helped cultivate this culture if you think about the
movies that have worked recently, comic book movies and, you know, fantasy
epics and so forth, where there is a kind of serial appetite. And you could
argue whether that's sort of, you know, nature or nurture, but I think many
moviegoers have come to expect other installments and feature installments.
Certainly we all regret some of the sequels that have been made, but there's
now a real drive, a real business incentive behind sequels.

GROSS: Well, let's look at "Legally Blonde 2" for a second. This is one of
the films that was focus-grouped. It was screened for people who then rated
the movie and said what they did and didn't like about it. What are some of
the most important things that came out of listening to the focus group?

Unidentified Co-author #2: Well, one was this inherent problem with Elle
Woods, who's the character played by Reese Witherspoon. You know, she was the
perky sorority girl from the original film. Now she's going to Washington.
And how do you invite people into the world of Washington without completely,
you know, flying over their heads or just dumbing it all down? And basically
what they decided to do is excise politics entirely from a film that was set
in Washington, DC, in which the lead character, you know, works for a
congresswoman. It was just a remarkable stripping away of every term, every
scene, every, you know, indication of something that reeked of social studies.
That was what the audiences were saying, you know, `Don't give me that stuff.
I want to see her, you know, having a manicure. I want to see, you know, the
kind of--the pleasure trip that the first movie was.'

Unidentified Co-author #1: Sure. The teen-age girls in the focus groups for
"Legally Blonde 2" wanted to see Elle Woods shopping. They wanted to see her
Chihuahua. They wanted to see her doing her sorority dances. They didn't
want to hear about filibusters and political action committees.

GROSS: I'm going to ask you to choose one of the three films that you write
about in your new book, "Open Wide," and tell us about what the trailer was
and how it was--how the trailer itself was promoted and whether it was
effective.

Unidentified Co-author #1: Sure. Let's talk about "Sinbad." "Sinbad" was
the animated film from DreamWorks that was a big disaster. It just--no one
really knew what "Sinbad" was. The advertising campaign didn't manage to
really strike a chord with a wide audience. And the last--but there's
extensive market research done in the preparation of the marketing campaign
and in the last few months of postproduction on the film. And one bit of
intelligence that was coming back from test screenings was that the audience
liked this character of Sinbad's dog.

Sinbad, of course, is a character from "The Arabian Nights" that ironically
was--you know, the film came out shortly after the invasion of Iraq, and in
"The Arabian Nights," Sinbad is actually a sailor from Baghdad who sets out
from the port of Basra. None of that was very good marketing material for the
film. And really that wasn't--the film itself was sort of cobbled together
from a lot of myths, including the myth of Sinbad.

But there was this character of Sinbad's dog, Spike, which is invented
wholesale by the filmmakers, and he tested really well. All the audiences
really liked Spike. So in the last few months of postproduction, Spike became
a much bigger character, and he became a very prominent character in the
trailers. So the last trailer for "Sinbad" that went out featured Spike
extensively. And the whole idea of this trailer was to try to make "Sinbad"
seem cool, and the trailer sort of started as if it were, like, a Mountain Dew
commercial. It had Sinbad, with the voice of Brad Pitt, saying something like
`Who's bad? Sinbad!' And they showed Sinbad's ship sort of skittering across
an ocean wave as if it was, you know, a scene from sort of an extreme sports
surfing competition. And the whole idea was to make "Sinbad" seem hip, with
lots of scenes of this dog, Spike. And it didn't really work.

GROSS: So let's look at what happened with the three movies that you
followed: "Terminator 3," "Legally Blonde 2" and the animated film "Sinbad."
Were they financial or critical successes?

Unidentified Co-author #2: Kind of all over the map. I mean, "Terminator 3"
was actually a critically successful movie. Most critics seemed to get on
board with it. Commercially, it did OK but not great in the US, but made a
great deal of money overseas, about 450 million worldwide, of which only a
hundred and fifty was in the US. "Legally Blonde 2" not as successful as the
first "Legally Blonde," but solidly profitable, made about 90 million in
ticket sales in the US and is going to sell a lot of DVDs. "Sinbad" was an
unqualified disaster. The losses are estimated at a hundred million dollars
for DreamWorks. They just sank so much money into the hundreds of people
animating the movie and then, of course, in the kind of ill-fated marketing
efforts.

GROSS: So what was the moral of the story for DreamWorks when "Sinbad" failed
at the box office?

Unidentified Co-author #2: They ended up returning to their roots. They
bounced back in 2004 with "Shrek 2" and with "Shark Tale," both
computer-animated kind of ultraslick, edgy kind of--edgy for animated
movies--fare, and they just didn't ever look back. They sort of closed the
door on the traditional hand-drawn animation and they're just looking forward
into the future. They've spun off DreamWorks Animation as a separately
controlled company, and they're just going to keep, you know, cranking out one
or two computer-animated films a year.

GROSS: Studios don't like movie-goers to know how much research is going into
a movie and how it's focus-grouped. You describe it as a pretty secretive
process. How much of it did you have access to, and how did you get that
access?

Unidentified Co-author #1: Well, it was a slow, gradual process of trying to
beat down the doors of the marketing executives and get them to disclose to us
the full complexity of the market research process, and it took a while. And
some of the events in the book are reconstructed after the fact. But we were
surprised at the level at which we were able to get access to these events,
reading the transcripts, listening to the tapes of focus groups and actually
hanging out in the trailer houses where, you know, the trailers were produced.
And it actually was easier than we thought, but I think, you know, what was so
important to us was to prove to all of the executives that we weren't going to
go away, that, you know, this book was going to be written with or without
their cooperation and that the only chance they had of really, you know,
getting the full story across was to cooperate with us and to give us, you
know, as much access as possible to, you know, the market research numbers and
the process.

Unidentified Co-author #2: John Gregory Dunne's book the "Studio" we talked
about before we embarked on this project, and we both agreed, you know, that
kind of access in which, you know--in the late '60s he basically roamed the
Fox lot, shadowing the production executives through an entire year's worth of
production. It's an impossible book to write nowadays, just because of the
corporate control and the kind of paranoia that grips each of these companies.
They just--you know, they don't exactly invite you onto the lot for a chat.

GROSS: Well, I want to thank you both very much for talking with us.

Unidentified Co-author #2: Thanks so much.

Unidentified Co-author #1: Thanks so much, Terry.

GROSS: Dade Hayes and Jonathan Bing are editors at Variety. Their new book
is called "Open Wide."

Martin Scorsese's new film, "The Aviator," uses a lot of period music,
including this Artie Shaw classic, "Nightmare."

(Soundbite of "Nightmare" by Artie Shaw)

GROSS: Coming up, Lloyd Schwartz considers the music in a new DVD box set
collecting silent films and early talkies. This is FRESH AIR.

(Soundbite of music)

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Review: National Film Preservation Foundation releases DVD set
of early films
TERRY GROSS, host:

Silent movies were never totally silent. There was music and often sound
effects. Music critic Lloyd Schwartz says that a new DVD set called "More
Treasures from American Film Archives" is a collection of 50 films made
between 1894 and 1931 that is also a fascinating history of film music.

(Soundbite of music)

LLOYD SCHWARTZ reporting:

Well before movies talked, filmmakers developed ways to relate visual images
and sound. In films that told stories, there were, of course, the
intertitles, those flash cards that tell us what characters are saying. But
there was also music to underline and undermine what we're supposed to feel.

On a new DVD set released by the National Film Preservation Foundation, MIT
music historian and pianist Martin Marks chooses and plays music that we know
was used for these particular films, or takes a well-informed guess at what
that music might have been. Romantic composers like Wagner and Tchaikovsky
and popular songs of the time were always in evidence.

In the original "Wizard of Oz," made in 1910, Marks uses songs from the road
show the movie was based on. In this charming film, Dorothy was played by the
nine-year-old Bebe Daniels, who later made movie history in Busby Berkeley's
"42nd Street" as the leading lady whose injury allows her replacement, Ruby
Keeler, to go out there an unknown and come back a star.

(Soundbite of music from "The Wizard of Oz")

SCHWARTZ: The 50 films in this set, not all of them silent, include some
amazing material: a delicious interview with George Bernard Shaw; four
minutes of one of the great 19th century actors, Joseph Jefferson, in his most
famous role, "Rip Van Winkle," filmed in 1896. We can watch Thomas Edison in
his lab in 1897. There's even 20 seconds, filmed a hundred years ago, of the
legendary sharpshooter of Buffalo Bill's Wild West Show, Annie Oakley, who
actually misses a shot. The music is a mid-19th century courting song called
"Shoot the Buffalo."

(Soundbite of "Shoot the Buffalo")

SCHWARTZ: One of the most fascinating films in the set is "Skyscraper
Symphony," a dizzying series of images of New York buildings, directed by
Robert Florey in 1929. We don't know what the original accompaniment was, so
Marks commissioned composer Peter Child to write a new nine-minute score.
It's haunting and sly and beautifully played by the Lydian String Quartet.

(Soundbite of music from "Skyscraper Symphony")

SCHWARTZ: If for no other reason, the producers of "More Treasures from
American Film Archives" should be applauded for including one of the greatest
silent movies ever made, Ernst Lubitsch's 1925 version of Oscar Wilde's witty
society melodrama, "Lady Windermere's Fan." You wouldn't think that such a
word-conscious playwright as Wilde could survive in a version that completely
leaves out what he actually wrote. Yet Lubitsch's camera and the subtle and
witty score assembled and in part composed by Martin Marks capture Wilde's
social nuances and true depth of feeling.

(Soundbite of music from "Lady Windermere's Fan")

SCHWARTZ: Lubitsch's "Lady Windermere's Fan" is closer to the spirit of Oscar
Wilde's play than most stage productions are. It's thrilling to have it, and
the 49 other not-so-silent films in this set, available on home video for the
first time.

GROSS: Lloyd Schwartz is classical music editor of the Boston Phoenix. He
reviewed "More Treasures from American Film Archives," released by the
National Film Preservation Foundation.

(Soundbite of "Dr. Real")

(Credits)

GROSS: I'm Terry Gross. We're closing with music composed by the composer of
our theme music, Joel Forrester. He wrote this piece, "Dr. Real," to
accompany a silent film.

(Soundbite of "Dr. Real")
Transcripts are created on a rush deadline, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of Fresh Air interviews and reviews are the audio recordings of each segment.