Welcome, friends, to another edition of Economic
Update, a weekly program devoted to the economic
dimensions of our lives: jobs, incomes, debts—everything
that’s shaping our lives at this moment
from the economic side of things.
I’m your host, Richard Wolff.
Today’s program is devoted to the coronavirus
catastrophe and, even more, to the economic
collapse that has now happened all around
it.
I want very much to focus on aspects, dimensions
of this crisis that are not being talked about
by our leaders across the world and, of course,
especially by the one we are suffering under.
And I also want to talk about aspects that
the mainstream media have tended either to
ignore or downplay.
In that way, this program can be a real contribution,
I hope, to our thinking and our acting to
work our way out of this twin dilemma—a
virus and an economic system that cannot cope
with it.
So let me start.
I want to begin by focusing in on how and
why there is a colossal failure, particularly
in the United States—because it does vary
from country to country—but particularly
in the United States a failure of U.S. capitalism
to prepare for this virus, this viral pandemic.
And I want to begin by making it crystal clear
to everyone that viruses are part of human
nature and nature around us.
We have had them.
We have been plagued by them for as long as
there have been people on this earth.
And animals are also affected—number one.
Number two, the United States has had viral
pandemics before, lots of them.
I’m going to tell you a story about one,
but I could have told you many.
I’m picking one, because its analogies,
to what is happening to us in the United States
today, are simply too obvious to overlook.
This is a story of a pandemic related to the
bubonic plague.
That’s right.
The plague, we usually associate with the
Black Death in 14th- and 15th-century Europe.
The bubonic plague was a disease carried by
the fleas that lived on rats.
And so it was associated in the popular mind
with rats.
Well, it lasted for a long time—centuries.
It came and went.
It did its worst back in the 14th, 15th century
when it killed roughly a third of all the
people in Europe at the time.
In 1900, it broke out in San Francisco, California.
It broke out.
But the then Governor of California, Henry
Gage, didn’t want to let the world know
about it.
He denied it.
He hid it.
It was only when federal medical authorities
exposed the virus, isolated it in the laboratory
that it was no longer possible for governor
Gage to hide.
The federal government was afraid.
People were dying in large numbers from it
in San Francisco.
Well, it really did a number on the reputation
of governor Gage.
And when he ran for re-election in 1902, he
was defeated by George Pardee, the new governor
of California, who immediately imposed a medical
solution, which did get rid, at least for
a while, of the virus in San Francisco.
It did pop up again two years later—another
pandemic.
But this time, the resources and the scientific
community were able to prevail over the political
hustler who risked everyone’s life, because
he said it wouldn’t be good for business,
which was probably true, and it wouldn’t
be good for his reelection.
But it turned out he blew that away too.
I’ll leave you all to think about what that
might imply for our current situation.
Preparing for a pandemic, in other words,
is a no-brainer you would think.
It’s like building roofs over buildings
so the rain doesn’t get you, because it
rains.
It’s like building a storehouse of food
resources and reserves, because, you know,
sometimes there’s a drought or sometimes
there’s a flood and you can’t grow the
food you need.
So you keep some on reserve.
Everyone gets that.
Here, in the United States, we have strategic
oil reserves, big tanks buried underground.
When oil is cheap, the government buys it
and puts it in there.
When oil is expensive, the government pulls
it out.
But it’s a reserve in case we need it, but
can’t bring it up or import it.
The logic is the same.
Any economic system that once our loyalty
would have to take care of that problem, but
private enterprise didn’t in our country.
Private enterprises didn’t produce the masks,
the tests, the ventilators, the gowns, the
beds, the hospitals—all of it.
They didn’t.
And you know why?
Because it isn’t profitable.
Who wants to make a mask and store it in a
warehouse for years until we need it?
Not a private profit driven company.
They know profit is what their game is.
That’s how they do well.
That’s how they move up.
That’s how they get rewarded.
So they didn’t make it.
They didn’t store it.
And the government, which in our case in America,
here believes that everything that private
profit does or wants is what’s good for
all of us—a delusion of enormous size—didn’t
compensate for what the private capitalist
sector failed to do.
So the government didn’t buy the equipment.
And the government didn’t buy the supplies.
And they didn’t store it either.
In other words, capitalism failed as a system
to prepare for a pandemic, we know is always
somewhere on the horizon.
But there’s a second way that capitalism
is important to hold to account these days.
Capitalism was weakened.
Capitalism was in bad shape when this virus
hit.
I know President Trump keeps telling us or
did, until now, of course, how great the economy
was.
Well, that was just like old governor Gage
back in San Francisco in 1900—don’t believe
it.
Here’s a historical example that might give
you a way to understand the relationship between
capitalism and this virus.
Back in the 13th, 14th, 15th century, we had
an already weakened feudalism in Europe.
The people back then didn’t know how to
deal with depleting soil fertility.
They put crops in the same place year after
year not realizing that the yield per acre,
the yield per person would go down.
Inequality between rich lords and a mass of
poor serfs grew.
And by the time the fleas and rats arrived,
people were poorly nourished, badly nourished,
not in good shape.
And that’s why the disease was so terrible.
And as historians teach us, when the disease
came and wiped out third of the feudal society,
mostly serves, many of the lords went belly
up.
They didn’t have the villagers to produce
that extra delivered to them as rent.
Here’s the story in a nutshell.
A weakened feudalism was vulnerable to a terrifying
disease, which further weakened the feudalism.
Parallel, a weakened capitalism was affected
by this pandemic, by the coronavirus.
And the suggestion of history is it will weaken
the capitalism that was already weak before.
But to make this point I have to show you,
which I’m about to do, as best I can, how
and why capitalism was weak, when this virus
hit us.
Here we go.
Number one, corporations, businesses—large,
small, medium—have a greater load of debt
going into this virus than they had ever had
in history.
And the reason is because of capitalism.
The crash of capitalism right after 2000,
the so-called dot-com crash.
And then again, the crash in 2008, the so-called
subprime mortgage crisis.
One of the ways that capitalism dealt with
the crashes then was to pump money into the
economy and to lower interest rates to virtual
zero, as you all know.
Therefore, every business did what?
Every business that had a problem, a bad investment,
a mistaken choice of what to produce, tensions
with your workers, a technology that didn’t
work.
You know how they solved their problem?
The cheapest way available, which was borrowing
money at no cost.
The federal government was pumping the money
in, charging no interest.
So every business loaded up on debt—reasonable,
unreasonable.
It didn’t matter.
There was no system to weed out those who
shouldn’t have borrowed, because they could
never pay it back.
When the virus hit, corporations were already
in trouble.
The same is true of individuals debts for
obvious reasons.
Corporations were sending jobs abroad, you
know that, for decades before the virus hit.
The jobs that were left, paid less, were less
secure, and had fewer benefits.
In plain English, it means you didn’t have
the health program you once had.
You didn’t have the security.
So you were full of anxiety.
You solved the problem by borrowing money,
which only added to your anxiety as you understood
what could happen to you if you didn’t pay
back—your loan.
People were distraught.
People were saving.
They were compensating for bad jobs, bad benefits,
bad security by not eating properly, saving
money, buying the processed bag of chips rather
than eating fresh vegetable—you know the
story.
Of course, our society was weakened in the
face of the coronavirus, the way feudalism
in Europe had been weakened when the bubonic
plague hit.
Then we had the same other kind of problem.
After the crash of 2008, the government through
trillions at corporations.
They were supposed to hire us all back—they
didn’t.
They were supposed to recreate the economy
that was successful before—they didn’t.
You know what they did?
They said, “We’re going to take this money
and do the only profitable thing with it”,
which isn’t surprising, because they’re
profit-making companies.
So they bought their own stock in the stock
market.
That boosted the stock market, boosted the
salaries of the corporate executives, whose
salaries were tied to the value of the stock
in the market.
They did the things that were good for them,
not for the rest of us.
So the stock market boomed.
We did have an inflation with all the extra
money, not in the goods and services you and
I buy in the store, but in the stock market,
which went wild, which made the top ten percent
of Americans very very rich.
And so they could afford, and did afford,
all the good things in life.
And everybody else had to make do with less.
But that’s not making do without consequences.
The consequences was to undercut our health,
undercut our well-being, undercut our reserves.
We became a society living from paycheck to
paycheck, more and more unable to afford the
things that can comfort you in life in a safe
way and turning instead to those that comfort
you in ways that are not good.
For what?
For resisting a virus among other things.
The notion that our economy was great before
this virus hit, is fake.
It always was fake.
It’s the perspective of those who live off
the stock market.
And even the stock market’s boom was fake.
Because it was all that money, thrown in by
the government, that was supposed to rebuild
a healthy economy, but didn’t and went instead
to the stock market bidding up the prices
to atmospheric levels that were not sustainable.
And how do we know that the stock market boom
was unsustainable?
Because when the virus arrived, the stock
market dropped like a stone, eradicating trillions
in wealth.
Little final point.
The loss of wealth in the last month is many
times more than what it would have cost us
to prepare for this pandemic, to produce and
store all of the materials we needed.
Capitalism made disastrous inefficient choices.
We’re living with the results.
We’ve come to the end of the first half
of today’s program.
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We’ll be right back.
Welcome back, friends, to the second half
of this program devoted entirely and specially
to the coronavirus catastrophe and the economic
collapse that has happened together with it.
And again, I want to do things and talk about
things that are not discussed by our leaders
nor by mainstream media.
And in particular, I want to devote this half,
the second half of today’s program, to what
should be done now—question many of you
have directed to me.
What is it that we ought to do that is not
being discussed and certainly not being done?
Let’s start.
This is a true national social emergency.
It affects all of us.
It threatens all of us.
And if ever there were justification for a
democratic response in which all of us, who
are affected by this crisis, can share and
participate—one person, one vote—to decide
how best to cope.
That’s how it should be done.
Because that’s the honorable ethical moral
democratic way to cope.
We’re not doing that.
First of all, with the economic crisis, which
is what I’m concentrating on today, what
the government has done so far is to throw
an enormous amount of money mostly at the
business community.
Whether it’s the Federal Reserve making
money available, cheap loans on a scale we’ve
never seen before, counted in the trillions,
or it’s the Congress, the executive, and
the congressional legislative branch passing
a stimulus law that, again, sends trillions
into the economy, it’s mostly going into
the hands of businesses.
What does that mean?
It means that in a typical corporation, the
people at the top, the board of directors,
a typical group of 12 to 15 people is making
the decision of what to apply for from the
government and what to do with whatever the
government gives you, Federal Reserve, U.S.
Treasury—whatever it is.
That’s not a democratic mechanism.
That’s allowing a tiny group of people who,
moreover, are committed to profit as the bottom
line to make the decisions.
That’s a terrible mistake.
How do we know that?
Because we know what happened the last time
the American capitalist system crashed in
2008.
Again, trillions were thrown at the business
community, again, by the Fed and by the U.S.
Treasury.
And once again, the people at the top took
the money.
And what did they do?
Rebuild the economy the way it was before?
Not at all.
Put billions of people back to work in the
jobs they once had?
Not at all.
Here’s what they did with huge portions
of the money thrown at them.
They raised the salaries of top executives.
They bought back their own stock in the stock
market to drive up the prices of those stocks
which were owned by the shareholders of the
company.
That’s right.
Corporate executives and shareholders did
with that money what was good for them.
And in case you need a little provocation
to be outraged, some of the money the government
threw at these corporations was used by them
to lobby the same government so it wouldn’t
impose regulations on them because of the
crash.
Whoa.
Is that the appropriate way to respond to
a crisis that affects everybody?
The answer is “no”.
Here’s what should happen in every business.
A new council—call whatever you want: the
Virus Council, the Pandemic Council, the Economic
Crash Council—composed of everybody who
works there, board of directors too—we won’t
exclude them, not that they don’t deserve
it—one person, one vote—from the sweeper
of the floor to the CEO.
Because we’re all in this together, aren’t
we?
And we should all be involved.
Guess what would happen if we did this?
And here are some of the things that should
happen.
They’re not going to happen, because the
people who are using the money for profit
have the control.
And the people, who need what I’m about
to list with you, don’t have the control,
which is why it isn’t being done.
Every business should be reconfigured to be
safe.
Every line of business should be socially
distanced: how the counters in the store are
laid out, how the machines in the assembly
line is laid out, how the school is organized.
Come on, you can understand.
We need to do that.
Number two, all the people currently unemployed,
why aren’t they being hired to do the testing
that this country needs?
And not just the testing, in other countries
they do something called tracing.
We need millions of people to become tracers.
You know what that means?
If someone gets sick, you trace all the people
that that sick person had contact with in
the previous two weeks to get them tested,
because they’re in danger, even if they
don’t know it.
That’s an enormous job that ought to be
done.
Every workplace has to now be cleaned, disinfected.
It has to be dealt with like we’re serious
about what it is we’re doing.
We need monitors to make sure that the masks
are there and adequate, that the gloves are
being worn every day, that the dirty ones
are discarded, and the clean ones replaced.
Companies haven’t been doing that.
And there’s no way to rely on them.
They’ve just shown us.
They do what’s profitable and spending all
the money on cleaners, and disinfectors, and
social distance managers isn’t their idea
of making money.
So they don’t do it.
Here’s what we mean and are not getting:
a program to transform our economy—enterprise
by enterprise—so it meets our social needs,
not primarily the private profits of what
is a tiny minority of corporate executives
and major shareholders.
If we don’t do that, we’re going to get
again what we got after 2008.
You know what that is?
The same capitalism that existed before, that
waltzed us into the crisis of 2008, was established
and waltzed us into this one.
Are we really going to learn nothing?
Are we really going to let it happen again
that a tiny core of profiters sitting at the
top of this system are going to continue?
Here’s a warning from history.
If you react to this plague in the way that
the feudal lords reacted to the plague of
the bubonic sort back in the Middle Ages,
then capitalism will be disappearing just
like feudalism did.
Because in the end, it’s not sustainable.
Just as millions and millions of workers in
the United States, as we speak, are confronting
an employer class that wants them to go back
to work, take the risks that that close proximity
to co-workers means, even though the same
employers and the same Trump that they control,
didn’t spend the money, neither the private
money of the corporations, nor the money of
the government to transform those workplaces
so they might claim to be safe.
It is outrageous.
And that lesson is not lost on the American
working class.
If you think it does, you’re making what
will be for you—the same fatal mistake.
Well, how might we go about transforming things?
Let me begin this by telling you how Europe
is handling this crisis different from the
United States.
In Europe, they are not letting employers
fire people.
They’re having the same problems: the restaurants
are closed, the cafes are closed, the factories
are shut.
Those problems they have too for the same
reason—the same virus.
But they’re not handling it the same way.
There is no major increase in unemployment
the way we have in this country.
They haven’t had 17 million people lose
their jobs in three weeks from the middle
of March to the early April.
No.
You know why?
Because they have a different system—you
stay on your job.
The government helps pay your wages.
That’s how the thing is handled.
They don’t want you to lose your job.
They don’t want you to have anxiety that
you’ll never get that job back.
They don’t want the company to go out of
business, because that hasn’t got workers
and it’ll be too costly and too longer time
to find workers to replace those who left
when they were on.
They don’t want any of that.
So they’ve kept their people working.
Well, not working—idle.
But they keep getting their wages.
Well, that’s better than what we do in the
United States for all the reasons I just mentioned.
But it’s not good enough and it isn’t
the solution.
Why are there any people either unemployed
or idle?
There’s lots of work to be done.
Only capitalism holding on to the enterprise
that’s privately profitable for the investor,
only that kind of system solves problems by
laying off people or paying them when they’re
not doing anything, because that’s inefficient
on a human scale, on any rational scale.
So here’s what we ought to do and this is
just a partial list.
Number one, we have millions of people who
are schoolteachers in America, who are not
going to school, because schools have been
shut down.
Every one of those teachers and in addition
retired teachers ought to have been hired
immediately, not laid off, not unemployed,
not paid with a wage even though they’re
not doing anything—pay them, by all means.
But here’s what we do—one-on-one tutoring,
a very good way of learning.
All the teachers become tutors.
They meet with a student one-on-one through
social media—one, two, three hours a day.
And a bureaucracy is set up to manage that,
which can be done electronically.
Every skilled worker in America who loses
his or her job can teach other people the
skills they have.
Let’s do it—one-on-one tutorial.
Let’s give people an incentive.
Let’s give them more help financially through
the crisis if they take a course and learn
something.
It’s good for our society.
It’s good to hire the people who will be
the teachers.
It’s good to subsidize the effort of people
to learn.
So they come out of this crisis with more
skills than they went in.
Come on, we can do these things.
There are other things we can do that I’ve
mentioned already, but I mention again—an
army of testers.
So we finally test our population.
And that has to be done on an ongoing basis,
not just once.
Because if you’re clean once, you may not
be in two weeks, or six weeks, or a month.
And your coworkers need to rely on you.
We need testers.
We need tracers.
We need it all.
And then there’s the greening of America.
And then there’s all of the work to reconfigure
our transportation systems and so on.
So that can be safe—lots of work to make
this economy safe.
And here’s a big one that I’m particularly
interested in.
I want to adopt the Marcora Law from Italy.
Italy passed a law in 1985, still on the books.
Here’s how it works.
If you become unemployed, the Italians don’t
want you to sit around there anxiety-ridden,
losing your self-esteem, having psychological
problems, drinking too much, you know.
And so here’s what they did.
They said to the unemployed, “If you get
together, any unemployed person, with at least
nine other unemployed people that you can
find, and together you start a worker co-op.
We, the government, will give you your entire
unemployment package—year, year-and-a-half
coverage of weekly payments—we’ll give
it to you as a lump sum right now with which
you can start your co-op business.”
What about that?
What about giving Americans a big chunk of
the stimulus money to start worker co-ops
to get together, to find those ten people
or more that you start with, to develop a
business plan, to begin to go into business
in whatever ways are safe at this point.
You know what that would do?
Not only give important creative opportunity
to people who are otherwise sitting around
feeling terrible, it will also do something
more.
It would give America a worker co-op sector.
You know, like Emilia-Romagna that district
in Italy already has, a place in Italy, a
region where 40% of the businesses already
are worker co-ops and doing great—work,
by the way.
Why don’t we do that?
Give Americans a worker co-op sector, make
something positive happen out of this crisis.
And then we would all have freedom of choice.
We would be able to see what a job is like
if you work in a worker co-op that’s democratic
versus a top–down capitalist enterprise.
What quality of work do they do?
How do they contribute to society?
We’d actually have freedom of choices about
that.
We don’t have it now.
This is a crisis from which we could learn
what’s wrong with the system we’ve had
and what an always needed changing, but now
stares us in the face with this choice.
Either change this system, or now the costs
of not doing it are becoming fatal.
This is Richard Wolff.
Thank you for your attention.
And I look forward to speaking with you again
next week
