Welcome friends to another edition of Economic
Update, the weekly program devoted to the
economic dimensions of our lives—jobs, incomes,
debts—those of our children, our own and
those looming down the road.
I’m your host Richard Wolf.
I’ve been a professor of economics all my
adult life.
And I put these updates together to give another
perspective on what’s going on in the economy
all around us and that we all depend on.
My first couple of updates today have to do
with something that’s more and more in the
news.
And that is the upcoming economic downturn.
That’s right.
Capitalism is a fundamentally unstable economic
system.
On average, every 4 to 7 years, wherever capitalism
has become the dominant economy of the last
250 years, we have an economic downturn, when
typically millions of people are thrown out
of work, large numbers of businesses dissolve,
we go through a period of time of real suffering
and poverty, and interrupted lives, interrupted
educations, before we get back up again and
to have it all happen again 4 to 7 years later.
Sometimes these downturns are short and shallow,
other times they’re deep and last a long
time.
The famous ones—1929 and, again, 2008—were
the kind that were long and deep.
We are still working our way out of the crash
of 2008.
So that gave a particular poignancy last week
when the International Monetary Fund issued
a report that global economic growth is slowing
dangerously.
And one of the major reasons are the trade
wars that were initiated by Mr. Trump and
the Republican Party, and power as they imposed
tariffs, first on the Mexicans and the Canadians,
and demands for rewriting treaties, and then
tariffs on steel and aluminum, and then on
China, you know the story.
It’s unfolding all the time.
Turns out that these trade wars and tariffs
are bad for economic growth around the world
and are another contributing factor in the
uncertainty of how to plan for the world that
leads businesses not to invest, which in turn
drives the economy down.
It’s interesting for me to point out not
only to remind everyone of how unstable capitalism
is, but to point out that this time the instability
may be considerably worse because of what
Mr. Trump and the Republicans are doing.
In order to appear to their political base
as though Mr. Trump is the tough guy, who’s
redesigning the global economy to better serve
the United States—America First.
This theater is actually going to cost everybody
including Americans.
An economic slowdown already, and maybe, worst
crash than usual any time soon.
And just to make sure you understand, this
is not just me speaking.
The largest bank in the United States, JPMorgan
Chase, issued a report a couple of weeks ago,
literally predicting that the next downturn
here in the United States will happen early
in the year 2020, that’s less than a year
and a half from now.
I don’t do predictions, I don’t believe
in them, but it’s interesting that so certain
is the bank, the largest bank in America,
that they’re ready to make a prediction.
Why did people accept an economic system that’s
so unstable?
That’s the real question.
As if to underscore the point, the Bank of
England, which is the equivalent in Great
Britain to what the Federal Reserve is here
in the United States, issued another report
last week, very worried about subprime debt.
Here’s what they explained.
Businesses have been borrowing money like
crazy over the last 10 years.
Why?
Because in the aftermath of the crash of 2008,
when the government of England, like America
and many other countries, feared that the
whole economy would collapse, interest rates
were brought down near zero to make it easy
for people to borrow and businesses to borrow
in the hopes that that would stimulate the
economy and prevent another great depression.
So interest rates being brought down led every
business—well-run, mediocrely-run, poorly-run—to
see a solution to whatever problems they’ve
encountered by borrowing, virtually, costless
money.
“The result is” says the Bank of England,
“that if the economy turns down now and
hurts a lot of businesses, they won’t be
able to pay back the excess borrowing that
they have undertaken because of the last crash.”
In other words, the last crash led the Bank
of England to bring interest rates down, which
leads to an excess of borrowing, which sets
up the next crash.
Talk about an unstable system!
Yeah, you have it, literally, showing its
instability as it functions.
My next updates have to do with markets.
Yes, markets.
This institution, which we are supposed to
believe, is either perfect or if not able
to be perfected if only we take the right
steps.
The latest example of this was the winner
of last week’s Nobel Prize, William Nordhaus—there
were two winners, he shared it with another
economist.
I had known Mr. Nordhaus because he and I…
our times at Yale University overlapped.
And I once and twice did him a favor, when
his course came to a short section on Marxian
economics, he invited me to teach that, which
I did to do him a favor.
Anyway, in response to his winning of the
Nobel Prize, which he got by the way, for
studying climate change, global warming, and
how to solve this climate problem, which he
took seriously.
His solution, indeed, he said it was the only
solution was a market solution.
Raise the price of institutions, companies
that pollute the air, basically.
Well, I’ve always found this extraordinary,
“Raise the price.”
That means people who have to buy these things
are going to be hurt.
What an interesting way of solving a problem—hurting
large numbers of people.
Wouldn’t it be easier just to outlaw the
practice?
Why is this playing around with markets and
to tell us that the market solution is the
only solution?
That’s straight out wrong.
Let me give you a couple of examples.
A hundred years ago, one of the great horrors
of capitalism was child labor.
The practice of capitalists to lower the wages
they had to pay to hire children as young
as five and six years of age, pay them very
little, and stick them in in place of adults,
who would have had to be paid more.
And of course, these children lost in terms
of their schooling, which they lost, in terms
of their childhood, which they lost.
It was thought to be a horror.
Now, of course, a market solution might have
been to raise the wages that had to be paid
to children, and there were some efforts to
do that.
But, thankfully, American families rose to
the occasion and said, “No, no.
No market solution.
Cut!
None of it!
Make it a crime to hire children.”
Guess what?
Solve the problem.
And it didn’t have to do it by a market,
which would have been difficult and slow.
Market solution is not advisable here.
Let me give you another example.
The Dutch government has been trying very
hard, together with the Dutch unions, to stop
corporations from using the Netherlands—and
the very special tax laws they have—to locate
an office there, make their profits show up
on their books in the Netherlands, even though
they do business everywhere else in the world,
because that way they can pay taxes in the
Netherlands, which are low, rather than to
have to pay taxes in the actual countries,
where they do business.
This is the scandal.
Europeans have been pressing the Netherlands
government to stop it, doing similar things
with the Irish government that also does this.
But I’m only struck by the fact that the
market solution has been to let this kind
of stuff go on, on the grounds that the corporation
must be free in the market to do whatever
it wants.
Market solution?
You must be kidding.
This is tax evasion, using the market as an
excuse just as it’s being used by folks
like William Nordhaus to allow the process
of dealing with climate change to go so slowly
and to be costly to the people, who can least
afford it, those at the bottom will have to
pay the higher prices attached to the polluting
items.
And I’m also struck that, while the Netherlands
government and the Netherlands union, and
European governments are really squeezing
on this tax evasion, the Trump administration,
the GOP, the American government for years
knowing that billions and billions of taxes
are not paid on the road by American companies
as, again, found it too complicated, too difficult,
too small to do anything about it.
Extraordinary.
Really extraordinary.
And there’s another angle that’s worth
mentioning.
The market solution, suppose—and this is
a problem for Mr. Nordhaus again—suppose
politicians are for sale, suppose there’s
a market and buying them, which we all know
there is, and suppose those, who are richest,
can buy the politicians best because that’s
how market works, that’s how the market
always works.
If things are scarce the people with the most
money bid up the price and get it.
So the people with the most money get to politicians,
who write the laws, that allow them to escape
the taxes.
That’s a market solution.
The market determines whose politicians get
into a position of power.
Mr. Nordhaus doesn’t want the market to
work there.
He only wants the market to work where he’s
interested in it.
Okay.
Then be honest and say that.
Don’t say you like markets because they
produce as many horrors as they produce positive
outcomes.
And an honest appraisal of them would always
have to take that into account.
My final update for today is to remark for
all of us that is an upsurge in labor militancy
in the United States, something we haven’t
been able to say for years.
And I want to call out and recognize those
workers that are no longer being passive and
dorsal, not taking it, not being angry at
politicians, who are not their first line
of problem, but the business and capitalism,
which is.
And I want to give out two shout-outs—there
could be many.
Workers are moving across the board.
But my first shout-out is to the 8,000 workers
at the Marriott hotel chain that are on strike
in 23 cities across the United States as we
make this program.
The Marriott hotel chain, in case you’re
not aware of it, runs over 6,500 hotels around
the world under its own name Marriott, but
also under the following names: Ritz-Carlton,
Sheraton, and Renaissance.
Those are all Marriott hotels.
Marriott is a $50 billion-dollar corporation
twice as large as the Hilton hotel chain,
which many of you probably think of as the
premier hotel chain.
It is very important that this leader in the
hotel industry has had to face 8,000 strikers
led by the UNITE HERE union demanding the
kinds of wages and working conditions that
should have given to these workers years ago.
This militancy is going to the point of strike
is a very important turning point in the labor
movement.
And so is the next example.
This one is the United Steelworkers of America,
and here is something particularly poignant
I want to point out.
When Trump levied the tariff on steel coming
in from the rest of the world, he gave a tremendous
boost to steel companies in the United States.
They didn’t have to compete anymore with
more efficient lower price steel coming from
out of the country.
That was blocked by having to pay a tariff.
So the American steel companies—patriotic
to the core—immediately raised the prices
of their steel taking advantage of the protection
of the tariffs.
They didn’t do anything for their workers.
And the workers are saying, “If you get
a benefit from the government’s tariff,
we want a share of the extra profits you got.”
Very interesting.
They demand a share of the profits they help
to produce, more power to them.
That’s a labor movement that’s becoming
creative.
Well, folks, we’ve come to the end of the
first half of today’s Economic Update.
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Thank you all.
We will be right back
Welcome back, friends, to the second half
of Economic Update.
It is my pleasure, once again, to welcome
to Economic Update Chris Hedges.
He hardly needs much of an introduction.
You’ve all seen him on this program before
and in countless other opportunities that
you’ve had.
But to remind those of you that may not know,
Chris is a columnist for Truthdig.
He teaches at the Princeton University in
a program for incarcerated prisoners.
He’s a Pulitzer Prize-winning journalist,
and a New York Times best-selling author.
His most recent work is called, in a very
suggestive title, America: The Farewell Tour.
Wolff: Thank you, Chris, for joining me.
Hedges: Thanks, Rick.
Wolff: Okay, let’s talk a little bit about
the book and then about some of the issues
that you raised in the book.
For me, what jumped out, when I first looked
at your book, was a line, that appears more
than once, that the United States seems to
you to be a society that is—and I’ll use
your word—unravelling.
Tell us what you mean.
Hedges: Well, I think all the warning signs
of a decayed society are palpable: the destruction
of the physical infrastructure, the capture
of power by an oligarchic elite, which has
destroyed democratic institutions, a final
military fiasco, which characterizes late
Empire, which it did with the ancient Greeks,
when they invaded Sicily, or when the British
invaded Egypt over the nationalization of
the Suez Canal and had to retreat in humiliation,
the economic mismanagement, which is pushing
us closer and closer towards another economic
crash, this time around without a plan B—since
they can’t lower interest rates anymore,
they’re going to fabricate out of electronic
ether another $26 trillion dollars—the loss
of civil liberties: militarized police, 25%
of the world’s prison population; and that
sense of stagnation, despair, hopelessness,
what the sociologist Émile Durkheim calls
“enemy”, which expresses itself in diseases
of despair: self-destructive pathologies,
that are rippling across the American landscape,
opioid addiction, gambling, suicides, sexual
sadism, and hate groups.
And as Durkheim points out, “Those who lust
for the annihilation of others are driven
by a yearning for self-annihilation.”
So that this book is really a look at those
pathologies because if we don’t rebuild
those social bonds, if we don’t make it
possible for people to engage in self-actualization
to reach their potential, their goals, their
desires—even in a limited way—then with
that economic collapse, these pathologies
will burst forth in even more frightening
configurations than they already have.
And I look at Trump as a result, as the symptom
of a diseased society, not the disease itself.
Wolff: And would you say, using the old psychological
term, that there’s a massive denial of everything
you just said that goes with everything you
just said?
Hedges: Yes.
Wolff: Because as for me, as I look around
the society and live here, there is a kind
of bizarre almost level of the denial that
any of these things add up to what you’ve
just said.
Hedges: Well, because it’s so bleak and
you add climate change on top of that.
The fact that we have a window now of probably
a decade, at most, to radically reconfigure
our relationship with the ecosystem, which
we’re not doing.
The reason climate scientists are so terrified
of going above two degrees Celsius, our feedback
loops.
And they know what feedback loops do because
they’ve studied it on planets like Venus,
which once had water, and is now 800 degrees.
At that point you’ve lost the polar ice
caps, the oceans acidify, sea level rises,
crops die.
I mean, feedback loops essentially accelerate
the deterioration in a way that there’s
nothing you can do, there’s no control.
And they’ve run mathematical studies, which
range between a 70% die-off of the human species
and complete extinction, and yet we’re not
responding.
We’re mesmerized by the vaudevillian reality
show, which has replaced news, political discourse.
And this is characteristic of a dying society
as it was, for instance, in ancient Rome or
the end of the Austro-Hungarian Empire.
I mean, there is a kind of just checking-out,
a kind of willful hedonism and infantilism
almost, and inability, because the problems
are so massive, to even acknowledge that they
exist.
Wolff: And I think Trump in some way exemplifies,
even in his personal style, a kind of willful
disregard, almost with enjoyable, making fun
of all of these problems as dismissing them
in this blithe way.
In your book, you also talk about people escaping
or trying to escape.
What do you mean by that?
What do you see as signs of an effort to escape
the very situation—even when you don’t
admit it—you still try to escape it?
Hedges: Well, half of this country now effectively
lives in poverty.
Social mobility for the working class is all
but non-existent.
All of the democratic institutions have been
reconfigured to consolidate both the wealth
and the power of the corporate elite at our
expense, as you know better than anyone.
What did they do with this fabricated money?
They bought back their own stock, or they
gambled.
I mean, the fracking industry, for instance,
is a losing enterprise.
It doesn’t make money, but its value is
based on projected profit not real profit.
Well, that’s exactly what we saw with the
dot-com crisis.
And they extract debt peonage on a beleaguered
population, because the money has to be paid
back, even though they got at 0% interest
on that student loan debt $1.5 trillion, household
debt, your credit card—you’re late on
your credit card, it goes to 28%—that’s
why they suppress wages although productivity
since 1973 has increased by 77%, you still
have a third of the workforce earning less
than $12 dollars an hour, and that’s by
design.
So they’re oppressing a beleaguered working
class in an effort to essentially pay off
the money that they have been handed by the
Fed, but it’s just, it’s an insane system…
The New York Times had a story the other day
that, I think, by next year we will be paying,
was it $370 billion dollars a year in interest,
and within 10 years, it’s $900 billion.
It’s not a sustainable system.
And yet, they are kind of use that phrase
they always use about Mattis and “there
are no adults in the room”, nobody is confronting
any of these crises, which are impending.
And I really, as I do in the book, look at
the Christian right, and I wrote a book on
a Christian right 10 years ago called American
Fascists: The Christian Right and the War
on America.
I don’t use that term lightly, I’m a seminary
graduate.
But I look at them as our version of a fascistic
movement, which has embraced that magical
thinking: you know, the rapture, which isn’t
in the Bible, the whole sort of heretical
belief that if we give enough, buy enough
prayer clause and give enough money to our
megachurch and make our megachurch pastor
a millionaire, Jesus will give us a Cadillac.
It’s an order perversion of the Christian
religion, and it’s been used to sacralize
the worst elements of American imperialism,
American capitalism, white supremacy, homophobia,
islamophobia, and everything else.
And it has perpetuated among tens of millions
of our fellow citizens the kind of utter denial
of fact and magical thinking that Trump exemplifies.
And I often hear people say, “Well how can
Trump build an alliance with the Christian
right?”
And having spent two years inside that machine,
Trump embodies, you know, he has all of the
characteristics that these narcissistic white
male leaders of megachurches have, including
preying on the despair quite effectively,
in the case of the megachurches, of the congregants,
in the case of his casinos, those who are
in economic distress.
And I would say the only difference—they’re
all con artists—the only difference is that
at least anecdotally, from what I can tell,
the sexual proclivities of the megachurch
pastors is probably little kinkier than Trump’s.
Wolff: About hate, the hate groups.
They’re getting more and more numerous,
in today’s New York Times, another story
about it, interwoven with the Republican Party
increasingly, apparently.
Where does that fit in this proliferation,
you mentioned it earlier, but this proliferation
of groups that really want to use violence
to enact a purifications ceremony of sorts
here in the United States?
Hedges: We should first be clear that that’s
always been within the DNA of American society
that Richard Slotkin calls “regeneration
through violence”.
So it’s always been there.
And white hate groups have always been there
going all the way back to the slave patrols
and the Clan, and the Baldwin–Felts and
the Pinkertons.
And they’ve always been part of the DNA
of American society.
And in times of societal distress or eventually
probably economic collapse, these hate groups
will be unleashed.
I mean, Trump is already inciting these groups
towards violence rhetorically.
Wolff: And during the campaign too.
Hedges: And he has done since.
But we live now in a period of relative stability.
With that stability gone, then these groups
will be in essence unleashed.
They’ll be given a kind of green light to
attack the vulnerable.
I mean, the whole idea that 11 or 12 million
undocumented workers is responsible for the
economic decline of the United States.
Wolff: You are already in crazy land.
Hedges: You are already in crazy land.
Right.
I mean, most of them are earning below…
It doesn’t make any sense.
But it works as you know.
And I saw it in Yugoslavia.
With the economic collapse of Yugoslavia,
and then this rapacious and often buffoonish,
Radovan Karadžić was every bit as buffoonish
as Donald Trump.
And so were the Nazis.
I mean, Hitler could not even speak proper
German.
But these buffoons are dangerous.
And they channel that rage, and it’s a legitimate
rage in terms of betrayal, towards the elite,
towards the vulnerable.
And these groups are at the forefront of that.
And the state wants that rage and wants that
energy to be directed away from where it should
be directed, which is at the elite ruling
class that has mismanaged the nation.
Wolff: And the system that is decomposing
on us.
As we come towards the end of the program,
I have to ask the question, how did you assess
the Kavanaugh hearings: this whole spectacle
that we had for several weeks around the Kavanaugh
Supreme Court nomination?
Hedges: But that’s what it was—a spectacle.
It was political theater.
The outcome was utterly preordained.
The fact, that Susan Collins (R-Maine) was
struggling over whether Kavanaugh would revoke
Roe v. Wade, is insane.
The Christian Right has made it very clear
that this is their guy and he’s on the Supreme
Court, because he will revoke Roe v. Wade.
He committed acts of perjury aside from the
fact that he’s very likely a sexual predator,
but none of it matters.
So it was the farce of democratic process.
Although Grassley (R-Iowa) like even ran,
rushed out over even though decorum and the
rules in place in the Senate.
And I think it was a kind of public window
into the utter dysfunction of American democratic
institutions and the fact that all we have
left is the facade of democracy.
We don’t live in a democracy, there are
no institutions left that can be called authentically
democratic.
Wolff: In the time we have the left, where
is it going?
I know it’s difficult and no one can see
the future and I don’t believe in predicate,
but nonetheless, what’s your gut?
Where is this that you so eloquently described?
Hedges: We know where it’s going vis-à-vis
climate change.
That’s not disputable.
Wolff: I meant the social dimension.
Hedges: Well, it’s unraveling.
When you have a figure like Trump, look to
the end of the Roman Empire with Caligula,
Nero, Commodus.
He actually reminds me of Commodus, who was
not interested in governance, he was just
a big show, and he dressed himself up and
went to the arena and fixed fights, and that’s
kind of like Trump.
So but we know where it’s going.
I mean, decay we have a kind of road map by
looking at decaying societies.
And they have very similar characteristics
as Joseph Tainter has pointed out in The Collapse
of Complex Societies including at the end
the withdrawal by a hedonistic and irresponsible
elite into the Forbidden City or something.
Wolff: So we’ve come to the end.
Thank you so much, Chris.
Thank you all for watching.
And remember, we will continue this conversation
on Patreon.
And if you’re interested in following, please
follow us on patreon.com/economicupdate.
I look forward to speaking with you again
next week.
