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Interview with Rev. Jesse Jackson; E-Smoke Rising; Vulnerabilities in Cell Phone Technology

Aired July 20, 2013 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

CHRISTINE ROMANS, HOST: Protests in the streets of America, voices across the country crying out against racial inequality.

I'm Christine Romans, this is YOUR MONEY.

Far away from any courtroom, when it comes to the economy, there can be no debate. Racial inequality exists. The numbers don't lie. In jobs, housing and investing, African-Americans lag far behind whites. The U.S. is a country where the unemployment rate for black Americans has long been double the rate for whites. 43 percent of African- Americans households own their own home, compare that with 73 percent for white households.

The only color that should matter when it comes to money is the color green. And yet the economic disparity between black and white is simply undeniable. In 2011, the media net worth of American households, was more than $110,500 for whites. That's almost 18 times the median net worth of African-Americans, about $6,000 and that gap grew significantly in the wake of the financial crisis.

So, why the disparity and what can be done about it? Talking race in America is never comfortable. But it's a discussion that is long overdue. Rev. Jesse Jackson, the founder and the president of the Rainbow PUSH Coalition has seen it all. From historic marches for Martin Luther King Jr., to seeking the Democratic nomination for president in the 1980 to watching Barack Obama become the first African-American president today.

Rev. Jackson, thanks for joining us this morning. So nice to see you. And a really important conversation we are having about inequality of wealth. Inequality money in America. What is the number one factor in your view, the number one factor in your view that 50 years of progress we have not made progress on money?

REV. JESSE JACKSON, PRESIDENT RAINBOW PUSH COALITION: 50 years later, we are free, but not equal. And as a matter of fact, free but less equal. I think one evidence was the housing collapse. We were targeted, (inaudible) clustered based upon race, and we've won with lawsuits, but the lawsuits we won didn't compare to the housing that was lost. In Chicago, jobs are out. The industrial collapse. There's a big factor in it. This past summer, they cut Pell Grants. Summer Pell Grants. Last year, Chicago was having 800 students, this year it has 500, summer Pell Grants. More (inaudible), with the school. Parent plus loans. The school's faculty had to go on furlough during the - during the spring break, because of lack of access to capital. So, lack of access to capital is the big deal.

ROMANS: So, it's not one thing. It's a lot of things really moved forward, propelled forward most recently by the housing crisis. When you look at the recovery, even in the recovery, you see people with money, people with jobs, people with homes doing great. There's one group of America making a lot of money right now. And everyone else is falling behind.

JACKSON: Well, the banks are doing better because they got bailed out. The insurance companies doing better because they got protected. So, those who got bailed out doing much better. There was 21,000 auto dealerships, there were like 800 black dealerships five years ago. That's now down to 200 out of 21,000. And there's not only one black soft drink franchise. For example, the stuff that make up the guts (ph) of Middle America and then you try to get to - General Motors has 4,000 auto dealerships, 236 African-American, and it's difficult because whites who got those dealerships got them into perpetuity. You can't even buy them anymore. So we're locked out of the infrastructure of the guts of the economy.

ROMANS: Let's talk about social mobility, because this is what keeps me up at night. When you look at these mobility numbers, when you look - this is supposed to be the land of opportunity. America the place where your ambition is the thing that can drive you. A talent and then the opportunities is what America givers you. Several recent studies challenge this notion. One report from Pew finds social mobility in U.S. is on the decline, Reverend compared with other nations. That means U.S. is no longer your best bet to move up the economic ladder if you're born poor. And the rich stay rich more often in this country. You know, that sounds distinctly un-American. So, my question to you, it feels like one America, two economies. Is it race that is dividing us about - in money or is it class?

JACKSON: Well, based upon race you have less access to education. We're more jailed. Now, Christine, you have the case where in Chicago, for example, the prisoners, this county makes $3 million for prison telephone calls, collect telephone calls. The poorest people get the calls they make. The other part of it is prison labor is on the rise. But you work - South Carolina, 20 percent of all prisoners are leased to companies, for example, that some kids in Cook County jail have been there three to five years waiting in pretrial detention. And what it means, is that when you go through - a big "New York Times" article a month ago that showed blacks and whites are using marijuana about the same level, and blacks are four to (inaudible) times more likely - more likely to be arrested. Then that is your record.

Then it's more difficult to borrow. More difficult to get a job, more difficult to live in public housing, more difficult to get scholarships.

HARLOW: We know all of those credit and background checks every employer is doing, 40 percent of employers I guess do background checks. And so, you know, I can definitely see how that is something that can hold somebody back. What ...

JACKSON: We do best, say, on the football field. Why - or the basketball court. Why do we excel in those areas? Because in those areas of life that most Americans really see, the playing field is even. Rules are public.

HARLOW: Now, that's an interesting point.

JACKSON: Rules are clear, referee is fair, and the score is transparent. But when the playing field is not even, you just - you can't score.

HARLOW: That is an interesting point. I haven't heard that point been made. What is the one thing that we can do? What is the one thing we can do to take this moment right now, with people on the streets, people talking about race, an uncomfortable conversation, talking about it again, talking about equality and looking at money and equality.

JACKSON: If (inaudible) Johnson opened up the war on poverty in Appalachia, as to deracialize the debate to some extent. Because you got these poor zones of hard-working coal miners. A coal miner that has over 6,000 (inaudible) poor folks in Appalachians as well. So, what happens is (inaudible), for example, the area where President Barack Obama was the organizer -- you cut public housing. You foreclose private housing, you close post offices, you close auto dealerships, you close trauma units. Guns and drugs and jobs (inaudible) flows. It's just a zone, a wasteland. That's where you have the violence coming from.

See, you need targeted jobs, jobs, education and transportation. Because if you live in Chicago, if you can't get public transportation, because they cut it, you can't afford private transportation. Job is a multiple (inaudible). So you can't get there for the job. There is a disconnect when people are trapped and living, and where the jobs are. And you simply can't grow.

ROMANS: Jesse Jackson. Nice to see you, as always. We will keep the conversation going. Thank you, sir.

JACKSON: Thank you.

ROMANS: Coming up, Black America feeling left behind in this recovery.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We don't see how the market is going up. We don't see that point. Of course, all we getting is what comes downhill. You understand? Which is the crumbs from the rich man's table.

(END VIDEO CLIP)

ROMANS: We're taking you to the streets of one community in Brooklyn. Fighting to break the cycle of crime and joblessness (ph).

(COMMERCIAL BREAK)

ROMANS: The economy. In black and white. One America, two economies. And the divide can often be drawn along racial lines. I want to bring in Zain Asher. Zane, you spent some time in one Brooklyn community where people are struggling, but determined, determined to change their fortunes.

ZAIN ASHER, CNN BUSINESS CORRESPONDENT: So, yeah. I went to a Bushwick (ph), and I found a community that desperately wants in on this economic recovery. You know, you know, Christine that the S&P 500 is up 18 percent so far this year. We know that jobs are coming back at a rate of 200,000 a month. I have a - you go to places like Bushwick, like Badsilick brown zone, they'll say to you - when I get rejected from a job is it because the name on my resume was Devon that it wasn't even looked out? You know, absolutely heartbreaking. But I did speak to one guy who is trying to change that, his name is Martin Allen, he spent 30 years in jail for robbery. He says, you know, I made some mistakes, but it's my job to help young black and women find work. Take a listen.

(BEGIN VIDEO CLIP)

ASHER: Stocks hitting record highs, housing in recovery, unemployment falling, but much of black America is feeling left behind.

MARTIN ALLEN, PRESIDENT, PPEE CONSTRUCTION: What we see every day is people struggling to put food on the table.

ASHER: At 13.7 percent, African-American unemployment is more than double the rate for whites. Martin Allen is trying to change that in his low income Brooklyn community after turning his own life around.

ALLEN: I was in prison, finishing up a sentence and I saw my stepson come through the same prison walls that I was in and right then, something went off of my head to say, enough is enough.

ASHER: He started his own construction company and began offering training classes, opening his doors to the homeless, ex-cons and anyone else interested. He estimates he has placed more than 2,000 people at job sites around the city.

LAQUANA WILLIAMS, TRAINED BY PPEE CONSTRUCTION: Oh, I changed my mind dramatically because as a mother, I felt like there was nowhere else to turn. I was stressed out, I was crying - I didn't know what else to do.

ASHER: Learning what else to do is where financial adviser Ryan Mack comes in. He is teaching people in his community about saving and investing.

RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: They really think it's not for me. I can just put money under my mattress. I can just continue to use this check cashing place.

ALLEN: We don't see how the market is going up. We don't see that point. Because all we getting is what comes downhill, you understand? Which is the crumbs from the rich man's table.

ASHER: But even middle class blacks lag behind whites when it come to investing. A 2010 survey of households making at least $50,000 a year found that 79 percent of whites were in the stock market versus 60 percent of African-Americans. The housing bust made catching up even harder. African-American households lost 53 percent of their media net worth in 2005 to 2009 compared with just 16 percent for white households. But with housing stabilizing, Mack sees opportunity.

ALLEN: How can we get in on this recovery? The first thing we have to do is you have to start establishing a credit immediately. You have to start paying your bills on time. You have to start budgeting. You have to start getting a stable job.

ASHER: A stable job like the ones in construction, Martin Allen hopes will be a bridge to something better.

ALLEN: We try to tell all of the people, look. Go to work right now. But use that as a stair step to take you to the next level. Four, five or six carpenters can get together and form their own little company.

(END VIDEOTAPE)

ASHER: And as I was leading the interview, one guy tapped me on the shoulder and said, you know, we've all had a trickledown economics, but why isn't this economy trickling down to us? Another guy I spoke to said that he was 47 years old when he opened his first bank account.

ROMANS: Wow.

ASHER: You know, so on the one hand ..

ROMANS: Wow.

ASHER: I know - so on the one hand, you have these stock market highs, that are better upper middle class, but on the other hand, 25 percent of African-Americans don't even have a bank account.

ROMANS: And more people, than more people living paycheck to paycheck today in America ...

ASHER: Right.

ROMANS: Live paycheck to paycheck that are exposed to the stock market. So that's really good.

ASHER: Yes, and then also a lot of the jobs that are coming back in this recovery, as you've talked about, are these low income, low wage excuse me jobs that are sort of part-time, so it's not exactly a fair recovery.

ROMANS: Thank you so much for that piece.

All right, do you know what this is? Your kids know what this is. They know exactly what this is. It's not the latest digital music device. It's a cigarette. Is it safer than the alternative or just the latest way tobacco companies are trying to market cool to your kids? Dr. Sanjay Gupta joins me next with the facts.

(COMMERCIAL BREAK)

ROMANS: The old fashioned Marlboro is getting some competition. If you look closely you might notice more people puffing on electronic cigarettes instead of the real thing. CNN's international Maggie Lake has been following this growing trend. Hi, Maggie.

MAGGIE LAKE CNN CORRESPONDENT: Hey, there. Christine. When is the last time someone lit up next to you in a restaurant in your city?

ROMANS: Long time.

LAKE: Can you even remember?

ROMANS: No.

LAKE: That may be changing because of these electronic cigarettes. Sales are soaring and big name investors are getting on board.

(BEGIN VIDEO CLIP)

LAKE: It's been decades since cigarettes like Virginia Slims were considered trendy and fashionable. When Don Draper of "Mad Man" fame could light up at will and when giving a carton of cigarettes was considered an appropriate holiday gift.

UNIDENTIFIED FEMALE: It looks so bright and colorful under your Christmas tree.

LAKE: But today with the dangers of tobacco smoke plastered on every packet.

UNIDENTIFIED MALE: You'll have an Led light in here.

LAKE: A new generation of smokeless cigarettes are gaining investor attention and even celebrity support.

DAVID LETTERMAN, "LATE SHOW WITH DAVID LETTERMAN": This is remarkable.

UNIDENTIFIED FEMALE: I know!

LAKE: With these cigarettes, nicotine is heated up, creating a smokeless vapor, and to the dismay of some in the health industry who worry about their safety, sales are rising. E-cigarette sales are expected to double this year to $1 billion market with dozens of brands to choose from. Investors who used to smoke out opportunity in the Trendy.com are stinking cash into smokeless startups. Former Facebook president and brains behind Napster Sean Parker is among the investors pouring a whopping $75 million into NJoy, one of the leading e-cigarette makers. Bedford Slims, a smokeless cigarette start-up based in Brooklyn is also attracting outside interests.

JESSE GADDIS, CO-FOUNDER BEDFORD SLIMS: I started on about $5,000 investment and throughout that course of the year, I raised about $15,000.

LAKE: And don't think big tobacco isn't sniffing out opportunity. DAAN DELEN, CEO REYNOLDS AMERICAN: Today, we are unveiling our latest transformative product. That is fused, digital vapor cigarettes.

LAKE: R.J. Reynolds the makers of Camel, Winston and Salem cigarettes rolled out Vuse.

Reynolds is not worked that people will turn away from traditional tobacco just yet.

STEPHANIE CORDISCO, PRESIDENT, RJ REYNOLDS VAPOR CO: There will be some level of cannibalization, however it's aligned with our transformation strategy. We've got to provide smoke-free alternatives.

LAKE: Smoke-free alternatives are only lightly regulated by the government, but there's nothing stopping them from being advertised on TV and in magazines. Without government intervention big tobacco may be back on the airwaves in a big way.

(END VIDEOTAPE)

LAKE: And it can be confusing when you see someone smoking it. They look just like a regular cigarette. Christine, it's really interesting when I talk to people, they're divided. Some people think it's great. This is a way that they can safely smoke, or can get them to switch from traditional cigarettes, although the companies themselves are careful not to make that claim. But other people, especially former smokers, say to me, you know what, it took me so long to break that habit. I don't even want to open the door a little bit. So a lot of debate.

ROMANS: And you can see even the packaging is meant to click like a lighter. The look.

(CROSSTALK)

ROMANS: Also the tactile experience.

LAKE: Concern about minors seeing this, too, and bringing back the cool to smoking that people worked so hard to sort of separate out.

ROMANS: OK, Maggie Lake, CNN International. Thanks, Maggie, for that excellent report. You know, e-cigarettes as we said are growing more popular, but what are the health risks? I want to bring in CNN's chief medical correspondent, Dr. Sanjay Gupta. Sanjay, give it to me straight. Are they safe? Should users beware?

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, let me put it to you like this. Since 2007, roughly, when these have been out, they haven't really registered health complaints. That's not surprising, because sometimes it can take time to register these health complaints. But the real answer is we don't know, and that's because this isn't regulated like a drug, Christine. Typically if you have a drug, you have to prove, you have to go through safety trials ahead of time. Something like this, you really have to -- the product gets out on the market, and then if health complaints start to come in, it's then subsequently investigated. When we looked into this, I can tell you when you talk about tobacco, you're talking about lots of different chemicals. You're heating them, you are lighting them, and potentially releasing some of the cancer- causing qualities of them. That's been the concern. Here you don't have many of those chemicals. You have nicotine, you may have some other chemical that cause that vapor. We don't know what those chemicals do for sure. But right now there's probably just still not enough data.

ROMANS: So much, Sanjay, about this, as I was just saying with Maggie, is the click of the top almost sounds like the old fashioned lighter. The way they look, the way they feel, even faintly how they smell. Could they be an effective aid to help people quit smoking, like the nicotine patch or the gum, or is this something that maybe, you know, people could get addicted to, people could start trying who maybe wouldn't have been a smoker and they like it.

GUPTA: You know, I worry about the latter part of what you're saying. I think, first of all, there's two reasons, and one of them is going to surprise you, I think, Christine. And that is you mentioned the nicotine patches or the gums. Those are designed to give you a certain amount of nicotine and then you sort of taper it off. That's how you get off of smoking. That's the goal.

Here, even with these e-cigs, it's not very clear at all how much nicotine people are actually getting. Some of the researchers we talked to said that it was about every ten puffs that they were actually getting some nicotine. Most of it is actually the vapor that is made up of things like propylene glycol, for example, and again, that's going to be need to be investigated more. But I'm not sure that you could say it's going to be a very effective smoking cessation device, and again for -- in part for the surprising reason that it doesn't actually give that much nicotine, at least the brands we've looked at.

ROMANS: A trend certainly to watch, both a financial trend and a health trend. Sanjay Gupta, thanks, Sanjay. Don't miss your appointment with Dr. Gupta every weekend. "SJMD" airs Saturdays at 4:30 p.m. Eastern, Sundays, 7:30 in the morning. Thanks, Sanjay. Right here on CNN.

Coming up, not everything you do on your cell phone is private.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You should assume that everything you're saying is being intercepted.

(END VIDEO CLIP)

ROMANS: At least that's what some hackers say. How to protect yourself next.

(COMMERCIAL BREAK)

ROMANS: It's a popular technology for extending cell phone coverage, and it had a major security hole that went undetected for years. CNN Money tech correspondent Laurie Segall joins me now with more on that. Hi, Laurie.

LAURIE SEGALL, CNN MONEY TECH CORRESPONDENT: Very eye-opening, I'll tell you that. So it was a hack that happened in a network device. A network extender is essentially something you take in your home if you have bad service and you can put it in there and you get better service.

I spoke with a bunch of hackers, and this is a Verizon device, who were able to tap into it and see basically everything you're doing on your phone. I want to show you how they were able to actually hack my text messages, first of all. Check this out.

(BEGIN VIDEOTAPE)

SEGALL: I've got a phone right here. I can text your phone, and you're going to be able to use this to intercept and see exactly what I'm texting.

TOM RITTER, SECURITY CONSULTANT: We see the text message after it leaves your phone, before it reaches the carrier, before it reaches the recipient's phone.

SEGALL: I am going to text him now. So I'm sending it. But before my friend even gets the text, these guys are reading it on their computer.

RITTER: And you can see right here. Looks like an outgoing SMS from this identifier sent a text message to this phone number, with the message "hey, what is up."

(END VIDEOTAPE)

SEGALL: You can see my face right there. I'm clearly shocked. The last thing you think is you're going to text someone and some guy in a room with a computer is actually intercepting that. But I will say it got even worse, because I was asking so what else can you do? And they can look into your browsing history. If you have ever -- I don't know if you have ever looked at your bank account statements, that kind of thing on your phone, they can do that. But he actually was able to record one of my calls. Check this one out.

(BEGIN VIDEOTAPE)

SEGALL: What else do you got?

RITTER: How about a voice call?

SEGALL: Let's call. Hi, Andrew, how are you? I'm good, I'm good.

RITTER: I will play it back for you.

SEGALL: Hi, Andrew. How are you?

UNIDENTIFIED MALE: I'm great. How are you, Laurie? (END VIDEOTAPE)

SEGALL: You could be walking down the street calling a family member and someone could actually record that conversation, very eye-opening. And that's just because this flaw has existed for years. So people could have been able to do this.

Now, the last one I will show you, think how often do you send texts or picture messages? Quite a bit. To friends and family. They were able to intercept the actual picture I sent to someone before it even landed on their phone. Check this one out.

(BEGIN VIDEOTAPE)

SEGALL: You can also see pictures. If I text someone a picture, right?

RITTER: Yes. Let's do a picture message.

SEGALL: All right.

RITTER: So your phone used your data connection to send a picture message. We intercepted the data connection, logged it, and grabbed the picture out of it. Showed it on the screen.

(END VIDEOTAPE)

ROMANS: So, Laurie, what does Verizon say about this?

SEGALL: They issued a statement. They said this was fixed. Let me read you what they said. They said, "the demonstration CNN saw was for an identified issue that was fixed earlier this year on all network extender devices." They went on to say that "the fix prevents the network extender from being compromised in the same manner." And they also said, "there were no reports of any customer impact." So if you do have one, all I can say is make sure to update your software.

ROMANS: All right, Laurie Segall, thank you, Laurie.

All right, coming up, a brand new edition of YOUR MONEY, 2:00 p.m. Eastern. Brand new. It's a lesson in hard core negotiating from Les Gold, you know him, the star of "Hard Core Pawn."

(BEGIN VIDEO CLIP)

ROMANS: We're getting waffles for the crew.

We're going to see.

LES GOLD, HARD CORE PAWN: What kind of deal we can make. How much are the waffles?

UNIDENTIFIED MALE: The average (ph) $4 to $8.

GOLD: $8 for a waffle? Why?

(END VIDEO CLIP) ROMANS: How to get the best price on everything. I learned a ton. A brand new YOUR MONEY coming up at 20:00 p.m. Eastern. CNN "NEWSROOM" right now.