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Iraq-Lebanon Comparisons; College Admissions Stressing Applicants; Suzanne Somers' Marketing Juggernaut

Aired April 17, 2004 - 12:59   ET


JACK CAFFERTY, CNN ANCHOR: Coming up on IN THE MONEY, a lot of so-called experts want to compare the situation in Iraq to Vietnam. We'll tell you why the U.S. involvement in Iraq looks a lot more like Lebanon in the early 1980s.
Plus, we'll talk to a soldier and a businessman who's hoping a good old injection of capitalism might improve things for everybody in Iraq.

And high school seniors got their college acceptance letters in the mail this week. We'll take a look at how the pressure to get into the top schools is affecting our kids.

All that and more coming up right after this quick check of the headlines.

FREDRICKA WHITFIELD, CNN ANCHOR: Here are the top stories we're following. At least two United Nations police officers were killed today in a shootout in Kosovo. It happened at a detention center in Mitrovica. The Associated Press is reporting that at least one American policewoman was killed, several other people wounded.

In Iraq, the city of Fallujah, in the volatile Sunni triangle, is the quietest it's been in days. Coalition negotiators are engaged in a second day of talks with local leaders to end the violence in the region. They're reporting progress in trying to strengthen a fragile cease-fire.

The Arab television network Al Jazeera aired this videotape of an American soldier taken hostage in Iraq. Private First Class Keith Matthew Maupin went missing after an ambush on his convey on April 9. A voice on the tape offers to swap Maupin for Iraqis in U.S. custody.

I'm Fredricka Whitfield. More news in 30 minutes. IN THE MONEY begins right now.

CAFFERTY: Welcome to IN THE MONEY. I'm Jack Cafferty. Coming up on today's program, hold the doors. Vietnam was a rock 'n' roll war, and some say it's a sloppy comparison to Iraq. We'll look at a modern conflict that might be a closer match.

Plus hurry up and calm down. Find out why hard-working kids are getting mixed signals from America's top colleges.

And the video store right in your living room. Netflix out to let you to order its movies without making you get off the couch. We'll tell you what's on the box.

Joining me today, a couple of the IN THE MONEY veterans, CNN correspondent Susan Lisovicz, "Fortune" magazine editor-at-large, Andy Serwer.

Boy it doesn't take much to rattle the bond market, one strong jobs report, one strong inflation report, and say good night, Irene. Interest rates jumped up just like that.

ANDY SERWER, EDITOR-AT-LARGE, "FORTUNE": Yes, that's really topic A on Wall Street right now, you guys. Is inflation coming back? You didn't mention retail sales also. IBM saying its tech spending picking up. China, possibly the biggest inflationary thing up there, and of course, Susan, what that does, moves mortgage rates up, right?

SUSAN LISOVICZ, CNNfn CORRESPONDENT: Yes, and you know, the news is good. Let's face it. Everybody wants the economy to improve. And the era of easy money is over, 45-year lows...

SERWER: Wow, she's going out on a limb, all right.

LISOVICZ: I mean, it's going to happen this year, I think, is the general consensus. And why is the stock market disappointed on the news, because then it competes with bonds. Their yields go up. And so that becomes an attractive comparison.

CAFFERTY: What is it with the stock market? I mean, if the rest of the world can figure out that interest rates have to rise, why does the stock market act surprised when there's some data that comes along that suggests it's time?

SERWER: Well, you know what's different this time around, we were just talking about this morning, quickly, is the country is so overleveraged right now, Jack, consumers, businesses, there's a lot of debt on people's books. If rates go up, that can be a problem.

CAFFERTY: All right. We'll keep an eye on it. It's kind of chic right now to compare Iraq to Vietnam. But a better comparison might be a messy, crazy, 20th Century war that isn't Vietnam. More about that in a minute.

First, let's see how rebuilding is going in that country where contract workers suddenly are being kidnapped and worse. Jane Arraf joins us with the latest from Baghdad.

Jane, welcome. What can you tell us?

JANE ARRAF, CNN BAGHDAD BUREAU CHIEF: Jack, that rebuilding is going in fits and starts, as you might expect, when there are kidnappings, when there are frequent disruptions, when the roads are closed, and when a lot of people are frankly just scared to come here.

Now, there's a lot of money being poured into here, obviously, $18 million -- $18 billion, rather, a lot of potential projects and a lot of work that is going on. But, clearly, it has been stalled somewhat by the security situation: what's happening in Fallujah, to the west of Baghdad, what's happening in Najaf in the south, U.S. forces massed in both cities and standoffs there that could turn violent -- Jack.

CAFFERTY: Any indication that the source of outside help to do this rebuilding is going to dry up? Have they changed the restrictions for people to get into the country? Are they keeping a tighter eye on the amount of civilian population that's allowed in there?

ARRAF: They're trying to -- you know, it wasn't so long ago that the U.S. commerce secretary was here, and I remember him saying, every American businessman should come here. It is safe. Of course, he was here for about 24 hours and didn't really get around very much.

Now it's dramatically different. I don't hear a lot of calls on behalf of economic officials saying, yes, please come and invest. I mean, clearly, they want the investment, but it is very hard to tell people that they will be safe in this climate. And what we seem to be seeing is an exodus of people rather than new investment coming in.

Now, there's obviously a lot of potential here, a lot of money, a lot of good people, a lot of resources. But clearly, the security situation is having a big effect -- Jake.

CAFFERTY: All right. Thanks, Jane. Jane Arraf joining us today from Baghdad.

Send American armed forces into a tough fight with no clearly marked exits, and eventually somebody's going to yell "Vietnam." It's the war that America doesn't want to remember and can't seem to forget. Some people say comparing Iraq to Vietnam, though, is anything from sloppy to just plain wrong.

So here's another conflict that might be closer to the mark. Think Lebanon. To talk us through that comparison, we're joined now by Fawaz Gerges, he's professor of Middle East studies at Sarah Lawrence.

Fawaz, nice to have you with us. Thanks for joining us.


CAFFERTY: What is it about Lebanon that reminds you of what's going on in Iraq, and how might the endings be similar or dissimilar depending on what we choose to do in Iraq?

GERGES: Well, I think, Jack, one point must be made very clear at the outset. All historical analogies are a bit misleading and simplistic. But having said so, I think America's predicament in Iraq is similar to that of Israel's in Lebanon in 1982.

As you know, Jack, when Israel invaded Lebanon in 1982 to expel the PLO, the Palestinian Liberation Organization from Lebanon, the majority of the Shiites in Lebanon, the Shiite community in Lebanon, that represents about 55 percent of the population, similar to that of Iraq, the Shiites in Iraq who represent about 60 percent. The Shiite population in Lebanon welcomed the Israeli invasion with open arms. Many Shiites were basically fed up with the PLO military presence in Lebanon, which turned southern Lebanon, in particular, the home of the Shiite community, into a theater of confrontation.

But, of course, Jack, as we know, Israel's current prime minister, Ariel Sharon, who was then defense minister, had a bigger appetite. He wanted to make Lebanon in his own image and create a pro-Israeli order. What happened is that a few months after Israel invaded Lebanon and after it was welcomed by the Shiite majority, the Shiite community turned violently against Israeli occupation.

Heavy-handed tactics by Israeli soldiers and also Israel -- the widespread perception that Israel was trying to install a puppet government in Beirut, of course, the cultural divide, Syria's and Iran's resistance to Israeli military presence in Lebanon, and then you had a major confrontation between the Shiite community on one hand and Israel which lasted a few years, of course, and hundreds of Israeli casualties -- actually thousands of Israeli casualties.

SERWER: Let me ask you the typical question turned on its head. Why isn't Iraq like Vietnam? And you can say that because we went in, we're an occupying force. There are a lot of people in the country that don't like us. Our plan seems to have gone somewhat awry. So tell me why it isn't like Vietnam.

GERGES: Well, I think this is a very good question. I think in many ways Iraq is similar to Vietnam because of the widespread opposition to the American political project in the country and also because of, I would argue, that the insurgency, the resistance is gaining and, you might say, deeper roots in the environment, in particular within the Sunni community.

I think it's different from Vietnam because you did not have the Soviet Union. You did not have China to provide the logistical and material support for the Vietnamese, and also because the ideological situation in the 1950s and '60s was quite different, as you know. There was a great power struggle between the United States and the Soviet Union. And the two powers, the United States and the Soviet Union, along with China, were fighting wars by proxies.

That is, the war itself in Vietnam was a product of the Cold War. Now you have really Iraq is on their own. There's no great power to support Iraqis, and in many ways I think it's different in this particular sense, even though the -- America finds itself bogged down in a similar situation to that of Vietnam.

LISOVICZ: OK. So we've gone to Southeast Asia and Lebanon and Iraq. Let's also talk about Israel, because you mentioned, professor, that Ariel Sharon was the defense minister of Israel at the time of the '82 invasion. Well, he's prime minister, and he was in Washington a few days ago, and in a major shift, President Bush supported a proposal by Israel that would include keeping some Israeli settlements. How much opposition ultimately from Palestinians do you see, and how much of an obstacle will that be?

GERGES: I think this is a very good question. It's a very good question because I think what President Bush did yesterday or two days ago, basically represented a strategic shift of American foreign policy toward the Palestinian-Israeli conflict. As you know, American foreign policy up until two days ago was basically that settlements are illegal. That is, settlements in Palestinian territories and that the question of Palestinian refugees should have been left to direct negotiations between Palestinians and Israelis.

I think, as we know now, given the deep suspicion of the United States in the Arab world, given the volatile security situation in Iraq, and given the fact that the United States is trying to build support for a peaceful and democratic Iraq, unfortunately, I think America's strategic shift is already creating a great deal of social upheaval in Palestinian society and in the Arab world itself. Many people are saying now the United States cannot serve as an honest broker. And unfortunately, what has happened is that really it deepens the suspicion of the United States. And I would argue it now creates an entirely new, you might say, pattern of behavior on the part of the Palestinians toward the Israelis.

CAFFERTY: All right. Fawaz Gerges, thank you for joining us, professor at Sarah Lawrence College, Middle East expert, nice to have you on the program.

Coming up next, just for once, forget what you see on TV. Well, not everything. Remember everything about this program, forget other things you see on TV. Discover why Iraq may be the best business opportunity you never considered.

Plus, slipping a disk. Find out how Netflix is trying to take the DVD out of the video rental game.

And straight As in anxiety. See why kids at top colleges don't know whether to bear down or chill out. Back in a minute.


LISOVICZ: From the pictures we've been seeing out of places like Fallujah, it looks like dressing for success in Iraq these days means just one thing, body armor. But our next guest says the country can actually be a great place for entrepreneurs to do business in spite of all the fighting there. Glenn Corliss is a sergeant in the U.S. Army Reserve, just back safely, we see, and we're happy to say that, from Iraq. He's an adviser to the Coalition Provisional Authority's private sector development team.

Welcome back home.

SGT. GLENN CORLISS, U.S. ARMY RESERVE: Thank you. It's a pleasure to be here.

LISOVICZ: It's a pleasure to have you. You know, when you think about the Iraqi economy, the private sector, you think about only one thing, oil. But after a dictator is overthrown like Saddam Hussein, there's a tremendous pent-up demand for all things retail, like cell phones and satellite dishes, right? : You're absolutely right. There is 13 years of pent-up demand in that country, and it is starting to be satisfied by investors. If you believe that there aren't investment opportunities in Iraq, take a look at the insiders. The insiders are the Iraqi expatriates, to a great extent, that are coming back to Iraq now and are repatriating funds at over $5 million a day, that's a $2 billion annual run-rate.

As an Army Reserve soldier over there, I went out to over 60 factories, visiting state-owned enterprises. Those factories greeted me with (UNINTELLIGIBLE) dinners, fish this big, with managers excited to be able to buy products from anywhere in the world and sell products to anywhere in the world. They haven't been able to do that for 13 years.

SERWER: But Glenn, aren't you concerned with what's going on there now? Hasn't this resurgence in fighting put the kibosh on all this?

CORLISS: If you're an investor, where you want to go is somewhere where there are problems that are solvable, but those problems are scaring away other investors. Right now a lot of people you hear are leaving Iraq. A lot of people in Iraq are doing business and happy to see there's less competition. These problems are solvable.

You want to go into a town and do business in that town, be invited to that town, partner locally, and you can operate there. When I was invited to these factories and to small businesses all around Iraq, and I've been every part of that country, I was invited first. And I went and I had wonderful trips and wonderful experiences and helped build businesses throughout that country.

CAFFERTY: To what degree, though, is the kind of scenario you're describing contingent on the satisfactory political and military outcome of what's going on over there right now? If that country degenerates into some sort of civil war among the Kurds and the Sunnis and the Shiites, if they can't get together on some kind of a governmental entity to hand this thing off to on June 30, if the insurgents continue to kidnap and murder civilians, how far is the economy going to get then?

CORLISS: I think you've let a wonderful Pandora out of the box by opening Iraq to the free market. And you can't put that back, thankfully. Iraqis are thrilled to be able to buy satellite dishes, cellular phones. I'm not an expert on what's going to happen in the next few years. You have plenty of people on television questioning that. But what I see is 25 million people who are thrilled to be able to buy what they want and sell the products that they make to whomever they want.

CAFFERTY: Do they hate the Americans being there, and are they afraid of the insurgents?

CORLISS: I have so many Iraqi friends that I feel guilty that I haven't e-mailed them all since I got back. So I don't see that. What you see on television, unfortunately, is when you see people causing trouble, you don't see the 99 percent of people who aren't causing trouble, who instead are standing outside the Iraqi business center waiting to get in to talk about how to get a small business loan. You're seeing the students, the 6000 students at the University of Baghdad, where I actually went with Secretary Evans from the Department of Commerce, and helped rebuild that school. In conjunction with the Department of Commerce and The Business Roundtable, we put over $2 million worth of computer equipment and textbooks and generators to rebuild that school. And they now have 6000 business students there learning free market business. You just don't see that as much on TV.

LISOVICZ: But Glenn, there may be pent-up demand in Iraq and the majority may in fact be happy that Americans are there and Saddam Hussein is gone, but you can't buy anything unless you have the money to do so. What shape is the economy in right now? Do Iraqis really have spending power?

CORLISS: Yes, to a great extent. Take a look at the payroll of state-owned employees. The average payroll right now of a state-owned employee is $120 a month. While in New York City, that isn't going to go very far, I admit, that goes incredibly far in Iraq. It's a different economy over there that is growing. You can see it. If the lines outside the cellular phone stores are incredibly long, satellite dishes are popping up all over that country. They have to buy those products. People are working, and more and more they're working. The unemployment rate is dropping by all statistics, even the World Bank is saying now that the 28 percent, 25 percent, maybe even below 20 percent unemployment rate is a more realistic statistic, where it was over 50 percent before the war.

LISOVICZ: It's refreshing to hear good news out of Iraq. Glenn Corliss, an adviser to the Coalition Provisional Authority's private sector development team and also a sergeant in the U.S. Army Reserves, just back from Iraq. Thanks so much for joining us.

CORLISS: Thank you for having me.

IN THE MONEY will be right back after this break. Coming up, the movie rental that's always in stock, Netflix is working on a new way to beat video late fees. See what that means for the company.

Plus the type A with a B.A., find out how the pressure of getting into a top college can kill the thrill of education.

And the anti-Martha, actress Suzanne Somers is proving that being less than perfect can be good business. We'll show you why, it's a good thing.


LISOVICZ: Now let's look at the week's top stories in our "Money Minute." The hefty tax refunds many were predicting this year didn't exactly come true for millions of Americans. Experts thought the bush tax codes would boost refunds an average 25 percent compared to last year. But so far the average refund is up just 5 percent. Former New York Stock Exchange Chairman Dick Grasso may have to fight to keep from having to pay back about $140 million in salary. Published reports say New York State Attorney General Eliot Spitzer has subpoenaed many of the former NYSE directors who signed off on that hefty pay package. The controversy over Grasso's pay, of course, led to his ouster late last year.

LISOVICZ: And hold the pepperoni and give me extra equities. The Domino's pizza chain is looking to go public with an IPO later this year. The company is hoping to raise about $300 million from the stock offering.

SERWER: The video through the mail company Netflix is coming off a great year on the Nasdaq. But yesterday it announced a quarterly loss much bigger than last year at this time. Now the company is getting ready to fast forward to the realm of video-on-demand. Netflix is our "Stock of the Week." And instead of the three of us just talking about the company, this time we brought in the CEO of Netflix himself, Reed Hastings joins us now from California.

Reed, welcome to the program. In the interest of full disclosure, I've got to tell you that Reed and I went to college together. But we didn't hang out much. I was in the library the entire time, right, Reed?



CAFFERTY: Yes, but Reed, you've aged better than he has.

SERWER: Anyway, Reed, good to see you. A lot of Americans are familiar with your company. And we've been hearing how Amazon and Wal-Mart, especially, Blockbuster are going to be coming in and eating your lunch. So far, that hasn't happened. What has led to your success so far?

HASTINGS: Well, we focused on building the world's best movie service, great customer satisfaction. As you mentioned, success breeds competition. And Wal-Mart entered two years ago, Blockbuster entered two years ago. We were at about 600,000 subscribers. And despite their entering, we've just continued to grow. Now we're nearly 2 million subscribers. It's really been phenomenal.

LISOVICZ: Let's talk about some specifics, Reed. The stock -- your stock getting a pounding on Friday, down about 15 percent on word of wider quarterly losses; raising the subscription fees, which could, in fact, of course, raise -- help the bottom line, but, in fact, may increase the churn rate, subscribers dropping out. Can you address that?

HASTINGS: Sure. Actually, we think about will drop the churn rate. What we're doing is investing more and more in new release content, and that's why we're changing the price from $20 to $22. So we're growing again at a terrific rate, about 80 percent on a year over year basis. And the one thing we've heard from subscribers is get us more new releases. So we're doing that. We're charging a little more, spending a little more. You know, it's our first price increase in over four years. And it's only 10 percent. So I think it will be fine.

CAFFERTY: How does your relationship with the content suppliers work, Reed? And at what point will your subscriber base get big enough that you can start to leverage a better price for your company from the suppliers?

HASTINGS: Well, we're only about a hundredth the size of Wal- Mart, so I think we've got a long way to go until we get something in that line. But the studios have been wonderful with us, partially because we've been so good at promoting hard to market films: "Whale Rider" as an example, small little film, $26 million film. But we've been able to make it grow and perform for the studios like it was $100 million film.


SERWER: Hey, Reed, the big question going forward though has got to be video-on-demand for you guys. Already here in New York City, Time Warner is rolling that out, and it's pretty successful. How is that going to impact your company?

HASTINGS: Well, Manhattan is a great example. It got video-on- demand about two years ago, and our subscriber count in Manhattan has continued to grow independently. We have over 18,000 movie titles. It's $22 a month for unlimited rentals. It's really quite a value, great selection. So I think we hold our own against cable, video-on- demand very well. And, then, of course, in the long term, we plan to offer electronic delivery to our consumers. So a consumer can choose, do they want the DVD by mail or do they want to get it downloaded to them?

LISOVICZ: Reed, but we want to go back to Wal-Mart. We've seen where Wal-Mart has gotten into the toy business, it's really hurt established players like Toys "R" Us, FAO Schwarz. It's gone into the food business, it's really hurt established players there. Do you see that becoming more of a player as you go along?

HASTINGS: Well, they could hardly be less of a player, so I suppose they'll be more of a player in our space. They did enter two years ago. Again, we were at 600,000 subscribers then. We've grown to 2 million. And Wal-Mart is a tremendous company, especially when you're talking about stores and store operations. But online, they have not yet distinguished themselves. So we keep a careful eye on them for all the reasons you referred to. But really they have not been a factor online.

SERWER: All right. We're going to have to leave it at that. Reed Hastings, CEO of Netflix, thanks very much for coming on. We'll be watching you.

HASTINGS: Thank you.

SERWER: OK. Coming up, overworked and underplayed. Too many students are so busy polishing their college resume, they're forgetting how to really learn anything or how to relax. We'll talk about why.

Plus she sells a lot more than ThighMasters, these days, oh yes. We'll look at the surprising marketing power and appeal of former "Three's Company" star Suzanne Somers.


WHITFIELD: Hello, I'm Fredricka Whitfield. We'll return to IN THE MONEY in a minute. But first a look at the headlines.

At least two United Nations police officers were killed today in a shootout in Kosovo. It happened at a detention center in Mitrovica. The Associated Press is reporting that at least one American policewoman was killed, several other people wounded.

Military officials say a suicide bomber killed a police officer along the Israeli-Gaza border today. Three others were wounded. Hamas military wing is claiming responsibility for that attack.

President Bush and his Democratic challenger gave competing radio addresses today. The president was urging renewal of the controversial Patriot Act. Parts of it expire next year. John Kerry took aim at the president's Iraq policy, saying the failure to internationalize the conflict has made America less safe.

Spain's new prime minister has been sworn in. Socialist leader Jose Luis Rodriguez Zapatero won parliamentary approval yesterday. He pulled off an upset victory in elections that came just three days after the March 11 terrorist bombings in Madrid.

Officials say the Army general responsible for briefing reporters on Iraq has the 24 hour flu. Brigadier General Mark Kimmitt nearly fainted today during a briefing in Baghdad. He regained his composure and returned to the podium a few minutes later. After a night's rest, Kimmitt is expected to give another briefing tomorrow.

Fort Dix, New Jersey, is celebrating today, 160 soldiers were back from active duty in Iraq. They were greeted by family and friends with hugs and kisses. The troops are from the New Jersey Army National Guard's 253rd Transportation Company.

All the day's news at the top of the hour, now back to IN THE MONEY.

CAFFERTY: High school seniors all over the country checking the mail these days with a lot of anticipation and sometimes more than a little dread. College acceptance letters going out to millions of kids all over the country this week. Some top schools, though, are finding that when their applicants try to look perfect on paper, they can burn out aiming for the bull's eye. Denise Pope joins us to talk about that. She's a lecturer at the Stanford University School of Education. She's also the author of "Doing School: How We're Creating a Generation of Stressed Out, Materialistic, & Miseducated Students."

Denise, nice to have you with us.

DENISE POPE, AUTHOR, "DOING SCHOOL": Thanks for having me.

CAFFERTY: I can tell you from personal experience, it's traumatic, it's stress-provoking, not just for the kids, but for the parents. You've got to put out all of these letters and resumes, make all of these applications. You bite your nails sitting around. The kids blow-up and have these break-downs if they don't get into the school they want. How is the situation different today than it was 10, 15, 20 years ago?

POPE: Well, it's definitely more intense today. There are more students than ever applying to colleges. And the admissions people will tell you that the standards have gone up. It's harder to get into the top colleges than ever before.

CAFFERTY: How much does that have to do with -- the standards may have gone up, but everything you read about public education indicates the test scores have gone down. We're not educating kids coming out of high school. Half of them have to take remedial classes in math and English when they get to be freshmen in college. How much of it is maybe not the standards of the universities going up so much as the kids not being as well prepared as they maybe could be or should be going in there?

POPE: Well, I think part of the problem is that the students are not learning and retaining the material. There's so much pressure to get the grades by hook or by crook, there's a lot of cheating going on, and they really aren't learning the material and being prepared when they enter the colleges.

SERWER: Denise, my children's school just got rid of AP classes. It was a very controversial move. But I think what they were saying is that they've created a culture where everyone was just learning for the sake of getting into college. Can you talk about that a bit? How much of the high school is culpable?

POPE: I think the schools are very culpable. I think part of the problem is the end goal seems to get in rather instead of to learn the material. Students will say to me, they'll do anything they can, by all means possible, just to get the grades and the test scores they need to get into the colleges.

LISOVICZ: You know, Denise, here in New York we've had several tragedies at New York universities, several suicides, remember at Harvard University, same situation a few years ago. Is there not enough emphasis for parents for just a well-balanced kid? Isn't that what employers and what parents and what society ultimately want, a healthy society?

POPE: I think we all want healthy kids. I think we all want well-balanced kids, and I don't think that message comes through now in middle schools, high schools, or even in order to get into colleges. I think what they think, in order to get into colleges, you have to be perfect at everything. You have to do as many AP classes and honors classes as possible. And you have to letter in your sport and take seven different extracurricular activities. That does not lead to a well-balanced kid.

CAFFERTY: What do you tell your students when you're lecturing about the fact that the prospects for good-paying jobs have declined precipitously for college graduates in the last four or five years in this country? I mean, I can name a bunch of my -- one of my daughter's friends, who are all graduated from college, all B students or better, they can't find a job.

POPE: Yes, I think that's part of the problem too is the colleges want to send this message of balance and health, and the reality is a lot of these students have to do the same games that they did in high school in college, just to get into graduate schools these days because they know the economic situation out there.

SERWER: Well, Denise, I'll tell you, it does trickle all the way down. My 10-year-old last night was just telling me -- I was congratulating her for doing well on a Spanish test, and she goes, well, that's good for me to get into college, right, dad? Jeez, don't worry about it. My goodness, you're 10 years old. But isn't there a contradiction here? We're telling kids now -- or you're telling people to relax, on the other hand, we're also hearing that we're falling behind on the sciences and the things like that. So which one is it?

POPE: It's actually both. The problem is the students are doing everything they can to get these grades and test scores up, but they're not learning how to think critically. They're not learning the material in depth the way we want them to. It's a real problem we're working on here at Stanford. In fact, we've got a whole conference on May 7 around this very issue.

CAFFERTY: Denise Pope, Stanford University, "Doing School: How We're Creating a Generation of Stressed Out, Materialistic & Miseducated Students." Thanks for being with us.

POPE: Thanks for having me.

CAFFERTY: Appreciate it.

Just ahead, we're not sure what she got on her SATs, but Suzanne Somers has taken a short sitcom career and -- I have some idea, however, and turned herself into a marketing icon. We're going to find out how that happened.

And will a new federal rule for spammers keep pornographic material from your computer? Don't bet on it. Back after this.


SERWER: "Three's Company" and one's a brand. Suzanne Somers was a pop culture icon, thanks to her appearances on the "Three's Company" sitcom. But after they fired her in 1981, Somers bounced back by creating a business. It's part public image, part private life, and it's all about being accessible. And today it's thriving. writer Rebecca Traister, got the lowdown, and she's here in New York with the details. Welcome, Rebecca.


SERWER: Hi, so what makes this woman so popular?

TRAISTER: Well, I think it's a mix of things. She has a very high visibility factor, is the thing that she says, because so many people watched her on "Three's Company," and she's been around for so long. She's a very familiar face. She's also incredibly accessible. She's always on television. She's on the Home Shopping Network. You know, she talks to audiences about her life. And I think that people really enjoy feeling like they know her.

LISOVICZ: Rebecca, I have to confess that when I'm channel- surfing and I get past -- when I'm on Home Shopping Network and when she was there, I just stop and I stare hypnotically into the screen. She sells everything from food to cosmetics to jewelry to clothes, and she is an excellent saleswoman. But something that we know in business is that, when somebody dilutes the brand, they're no longer effective. She's spread pretty thin, but yet she is still so successful. Why is that?

TRAISTER: Well, I'm not sure what it is -- I do agree with you that she seems to be spreading herself very thin, but every one of her product lines seems to be popular. She sells jewelry on the Home Shopping Network. She sold a million of her Trilliant bracelets, which are her self-designed bracelets. She sold 10 million ThighMasters over the years. Her books -- she's written 11 books, memoirs and diet books. Every one of them has been a best seller. So she seems to be successful in all of the areas that she chooses to pursue. I think that part of it is, as you said, she hypnotizes you. Her presence is incredibly compelling. Talking on the phone with here, I found myself almost in a trance. She has a soothing voice. You trust her. She's very hypnotic. And I think that that's part of what hooked people, when they're channel-surfing, when they see her face on a product or on a book.

CAFFERTY: Rebecca, Jack Cafferty. Who's the architect of this second career? She put this together herself? And I ask that in the context of, here is a woman who took arguably one of the most successful sitcom careers in the history of television and committed professional suicide with it, thanks to taking advice from some guy she was married to and overplaying her hand the network and a bunch of other stuff. Is she the current brainchild of her current success, or is somebody else pulling the strings on this one?

TRAISTER: Well, she is still working very closely with her husband, that same man that you referred to, Alan Hamel, who is her longtime manager. And he is a co-owner of all their companies. And she credits him with a lot of the business decisions. Now, I think that much of her work does spring from her own interests and certainly from her own life. I mean, she has capitalized on every one of her personal experiences, whether it's having had an alcoholic father or going through menopause, to create something to sell, a book or a product. Now, whether the business machinations of that were the invention of her husband, Alan Hamel, I don't know. They work very closely together. Everything they do is a partnership.

SERWER: Rebecca, quick last question. Do you think that it helped that her she actually went through these travails and maybe actually that will help Martha Stewart if she ever comes clean and admits that she has some foibles? What do you think about that?

TRAISTER: I think that Suzanne's sort of personal tragedies or difficulties are -- have been very important to her success. One of the differences that she pointed out, between her business and Martha Stewart's business, is that Martha, up until now, has been very quiet about whatever her personal tragedies have been, whatever her personal traumas have been. Whereas Suzanne, as I said, has written and talked about alcoholism, about a botched abortion, about gender discrimination, getting fired, menopause, sexual difficulty, and been very open with her fans and that's part of what has drawn them to her, and encourages them to buy her products and trust her advice, whatever it's on.

CAFFERTY: I just like watching her do the ThighMaster thing. I'm pretty simple.



CAFFERTY: Rebecca Traister, staff writer at Thank you for visiting with us.

TRAISTER: Thank you.

CAFFERTY: Coming up on the program, as we continue, here comes the federal government with another plan to save us from spam. We'll find out if this government plan will work.

And we promise never to treat your e-mail like spam. We actually read it all, respond to it too. You will get a personal response if you write to our program. The address is

First, Andy has this week's edition of "Money & Family."

SERWER: Are you and your family looking for a new financial planner? Well, here are a few tips to help you find the right person to manage your money. The first step is to figure out what you want from a financial adviser. Are you interested in specialized tax advice, help with your overall financial plan, or guidance with investment picks?

The next step is to interview financial planners. You want to make sure to check his or her credentials, find out which organizations issued the credentials and if he or she is in good standing. Remember certified financial planners typically study for two to three years, so stay away from people who say they simply passed an exam.

It's also a good idea to ask financial planners if you could talk with a couple of their former clients. They can tell you specifics about the kind of service they received and if the planner understood their goals and values. If a planner is unwilling to pass along references, take that as a red flag.

And once you've chosen a financial planner, clarify your agreement, how he will be paid with a set fee or by commission.

I'm Andy Serwer for "Money & Family."


CAFFERTY: The federal government's about to impose a new rule that is guaranteed to help you avoid sexually explicit spam e-mails. Right. Joining us now to take the shine off that silver bullet is Web master Allen Wastler.

Can they really do that?

ALLEN WASTLER, MONEY.COM: Well, it's a nice idea. OK? What it is, it's part of the new Can Spam Act, you know, catchy name, right? And they say you've got to figure out a way to stop the porn e-mail. So the FCC put their thinking cap on and got some people to write in.

This is what they've come up with. The subject line will have the words "sexually explicit" in there, required by law. If you don't do it, you're violating Can Spam, prison and fines. All right?

Also, you know how you get a little preview pain (ph) sometimes header information depending on your e-mail program? You can't have any naughty stuff in there. They're calling that the "plain brown wrapper." OK? It just says "sexually explicit."

So the idea is, in your fancy little program, you can set your filter to say anything that says "sexually explicit," don't give it to me, so it gets hung up in the filter.

SERWER: So what if Jack sends an e-mail that's a little racy to me?

LISOVICZ: Oh, he would never do that.

CAFFERTY: I would never do that, so I mean, hypothetically speaking.

SERWER: I have a friend who sends me racy e-mails.

WASTLER: It shouldn't catch that up. Just the "sexually explicit" should trigger the filter. So It's a great idea.

CAFFERTY: Are we going to have this great debate now about what constitutes "sexually explicit," what constitutes...

SERWER: I know it when I see it, Jack.


WASTLER: One commenter did raise that in the rule-making process. I called them and asked them if they're planning on challenging, and at this point, they're giving no indication that they do. But going forward with that, you've got -- spammers, they aren't the most wholesome bunch in the world. So are they going to - OK, we're not going to do that. And then, you know, then there's misspellings and, oops, we didn't do this. And also, they might just bounce it overseas and get it to you anyway.

LISOVICZ: They misspell a lot now, because they don't know how to spell probably. Let's go to "Fun Site."

WASTLER: OK. You were talking about Suzanne Somers before? And we all remember, ,I've got a site for you where you can hear the music, Jack, to "Three's Company." Let's take a listen.


CAFFERTY: Is that the theme from "Three's Company"?

WASTLER: Yes, that's the theme. Now next, here's another favorite old one. Maybe you'll recognize it.


WASTLER: Recognize it? "Barney Miller."

SERWER: Oh, "Barney Miller."

WASTLER: The final one, Jack...

CAFFERTY: Why can't you do like "Bonanza" or something.

WASTLER: Jack, whenever I'm here with you, talking, remembering the old days. I remember when you and I used to be together, and you used to regale us with stories from your childhood.

CAFFERTY: You should phrase that, we used to do a television show together.


CAFFERTY: You know what I'm saying? I mean, just for purposes of clarity and accuracy in media here. I'm sorry. Go ahead.

WASTLER: That's OK. You used to regale us with tales of your childhood.



WASTLER: Tell us about the old days, Uncle Jack.

CAFFERTY: Allen and I did a program on CNNfn, which is the witness protection network run out of Atlanta, Georgia. And once in a while, I'd get off on these little tangents about things I did from my youth, and they'd start playing this "Waltons" music behind me as a way to irritate the host of the program.

WASTLER: And it still works, apparently.

CAFFERTY: Yes, and it still works. Thank you very much. Allen Wastler.

Moving right along here on IN THE MONEY, coming up next we'll read some of your e-mails. You can get in on the act too by sending us a line at Do that, won't you? We're dying to hear from you.



CAFFERTY: Time now to hear what some of you think is America's next best move in Iraq. Richard wrote this: "We should get out while the getting is good. We won the war to liberate the Iraqi people from Saddam Hussein, now let the Iraqis select their own government. If the terrorists take over then at least we'll know who and where they are. Who cares if they choose democracy."

Ron in Virginia wrote: "We should immediately set up a fund that gives each Iraqi citizen a cut of the nation's oil sales, like citizens in Alaska receive, that way the Iraqis will see they have a stake in a stable country and it will eliminate the silly notion that the United States just wants to steal Iraq's oil."

SERWER: Interesting idea.

CAFFERTY: Yes. Cathy in Canada wrote this: "I would use all of Saddam's stolen money to set up a special fund to pay all of the Iraqi police, firefighters, ambulance drivers, et cetera. How can we expect the Iraqis to risk their lives against the terrorists...



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