Welcome friends to another edition of
Economic Update, the weekly program
devoted to the economic dimensions of
our lives,
jobs, debts, incomes, our own, our
children's.I'm your host Richard Wolff.
I've been a professor of economics all
my adult life and in a way been
preparing to offer these economic
updates each week before jumping in
today let me quickly announce that we
have a new mailing address a new post
office box and we'd urge those of you
that are mailing anything to us check
with our website democracy at work dot
info for that new address and likewise
those of you interested in starting or
joining an action group based on what we
do that may already be in your city
please go to our website again address
is action dot democracy at work dot info
and there you will get all the ways to
proceed along those lines so turning now
to the economic updates there's a theme
for today's in it the theme might be
best described as how and why we can do
better than capitalism as a system and
much of what we do today will illustrate
that point I start with a remarkable
experiment undertaken by a capitalist
enterprise in New Zealand it basically
went from a five-day workweek to a
four-day workweek salaries were not
reduced workers simply had four days
rather than five days to do their job
and the result by the way the name of
the company is the perpetual Guardian a
financial company that employs 240
workers it did the trial in March and
April of 2018 and the Guardian newspaper
covered it as did other newspapers
around the world but I want to make sure
you get the message the company loves it
the company reported better results that
way than in the old five-day week in
other,
workers had a better what they call their
life work balance because they had the
extra weekend day Friday off
they worked better they worked harder
they had more energy it turns out that
the old capitalist system of making
everybody work five days a week just
convenience the employer it wasn't even
good for them and it sure wasn't good
for the workers it's a failure of the
system to have taken this long to
discover what this New Zealand company
found out here's another example of how
capitalism is something we surely can do
better than it has to do with the
capital of the country of Austria namely
the city of Vienna and there's something
about housing in Vienna that I want to
talk to you about because my guess is
you probably don't know which is itself
a reflection of something important that
we don't know about these things
62% of the citizens of Vienna live in
public housing housing built by owned by
and operated by the city of Vienna in
other words public housing is the
dominant form of life in that city
nearly two-thirds of the people live in
public housing and let's now talk about
it it turns out for example that a
average monthly rent paid by folks in
there is between four hundred and
seventy and six hundred dollars a month
yeah you heard me right that's because
it's not profit-making housing it
doesn't have to profit the Builder it
doesn't have to profit the operator it
doesn't have to profit the maintainer
and because it doesn't have to make
profits because it's a public service
the benefits are passed on to the
tenants whose rent is far far below the
average percentage
a home owner a home renter excuse me in
vienna the percentage of rent out of
their income is 27 percent i checked and
in new york city
it was 58 percent in other words the
percentage of your income you have to
spend for rent is twice in new york city
what it is in the capital of austria one
of the great cities of Europe Vienna it
turns out that if housing isn't a
profit-making business you can do much
better for people and if you ever go to
Vienna as I've done and you visit the
public housing as I've done you will
understand what the difference is the
homes are well-kept the landscaping is
beautiful the comfort is obvious and the
happiness of the people clear a hundred
years ago this project was started ever
since then ever since the 1920s when
conservative and liberal and left-wing
and right-wing governments came and went
none of them ever dared do anything
about that public housing structure
because it is so popular and so
satisfactory nobody wants to go back to
private enterprise housing a little bit
like the state of North Dakota here in
the United States which has a publicly
owned and operated bank and despite lots
of right wing left wing Democratic
Republican governors nobody dares to
mess with their public bank here's
another example of how we can do better
than capitalism Fordham University in
New York City a Jesuit institution just
signed a contract with their
non-tenure-track faculty usually called
adjuncts the contract gives these
adjuncts teachers who teach one or two
courses raises between get ready sixty
seven and ninety percent the SEIU union
representing these faculty edge
it's says that they will be getting at
the end of this three-year contract
between seven and eight thousand dollars
per course they teach
despite anti-union sentiment
despite the hostility of all kinds of
forces when the unions got the adjuncts
together which they did and they voted
sixteen to one to have this contract and
the fight for it the university decided
it's wiser to come to terms than to try
to defeat something when workers are
that unified and that determined now of
course let's be fair here is it a
victory for labor for sure is it a
recognition of the grotesque
underpayment of adjuncts across the
United States for sure but let's be real
adjuncts remain even if they are paid
seven or eight thousand dollars per
course much cheaper as a way of
providing instruction than having the
old system of professors teaching two to
three to four courses and getting a
proper salary you can live on
so universities are still moving to the
cheap but they're not as able to exploit
when workers begin to push back
who knows if the adjuncts keep at it we
may reconstruct the really fine
educational system at the higher level
that we once had and now some more
examples of how we can do better than
capitalism the next one has to do with
the Burberry company you know the ones
who make those famous British style
raincoats and plaid outfits of one kind
or another they were recently caught and
exposed in the press for having burned
burned tens of millions of dollars of
goods they had produced coats clothing
of various kinds and so on why did they
do that answer to protect our brand see
they were afraid that these perfectly
good new coats
jackets boots you name it would get into
the hands of discounters and become
available at discount clothing shops
this for them would threaten their
profits so here's what they did they
burned clothing that could have helped
countless people tens maybe hundreds of
thousands of people could have had
important clothing and it wasn't
destroyed because of Burberry I'm not
interested in attacking Burberry they
did what other companies do because it's
the logic of capitalism to make a profit
if you're a high-end
producer you've got to make sure that
folks can't find your stuff at a lower
price and if that means destroying what
could close people that's what you do
the fault here isn't Burberry the fault
is a system that makes that irrational
action destroying brand-new clothing
logical the system is the problem
here's another sad statistic that
suggests we can do better than
capitalism 25 to 34 year olds in the
United States have been dying annually
from alcohol-related liver disease in
record numbers growing rapidly over the
last few years and as per the reporting
of the NPR system the economic troubles
of the United States are the logical
conclusions making it were capitalism
can kill does it pay us to find
alternatives to a system that drives
young people in the prime of their lives
to die from alcohol-related diseases we
can't do better than a system that works
that way sure we can and now the last
one and I leave it for last only because
in the sense it is so grotesque a
critique of capitalism that I want to
say it slowly so it sinks in airlines in
the United States
who have been doing quite well in recent
years partly because of organizing their
roots so that airplanes are full because
we just don't have that much choice as
we once did have decided they can make
even more money and so here's what
they've done and if you don't believe
this let me urge you NBC News has a big
nice spread on this go look it up you'll
get the details what the airline
companies that producers together with
the airline companies that fly you have
worked out is they have narrowed the
walls of the lavatories they've not only
narrowed the wall to enable us I guess
in the rest of the airplane to hear
what's going on inside there but they've
also narrowed the space so you better
learn how to do what brings you into the
bathroom in a narrower space than you're
accustomed to you won't just be a
sardine in your seat in the main part of
the plane you'll now be an even greater
squeezed sardine when you're in the
bathroom and why they have no shame so
they tell us why it will allow them to
squeeze in another roll of 2 to 3 seats
right there in the back of the airplane
where the lavatory for most folks is yes
it's a way of profiting the airline and
the 1% of Americans who own most airline
stocks at the expense of the millions of
people who ride the airplanes and yes
once again capitalism divides us because
if you have enough money to sit in
business class or first class rest easy
those bathrooms aren't being shrunken
just the ones where most of us sit
that's where they're being shrunk that's
a system called capitalism
than by profit that constantly finds
ways mostly hidden but some of them like
this one you can't really hide it finds
ways to hide or disguise prioritizing
profits over people's needs over
people's comforts of course we can do
better than that
especially when we see clearly what that
is and where it leads as a system that
does it for the first part of the show
but before we meet today's guests folks
associated with a Toys R Us toy chain,
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will be right back
welcome back friends to the second half
of Economic Update for today it is my
pleasure and my honor to welcome two
guests we normally have one but today
we're doubly fortunate we have two and
both of them have been involved with
something that occasioned today's
program namely the clothing of an iconic
store here in the United States Toys R
Us so I want to introduce my guests and
then we'll get into a conversation of
what happened to that remarkable
nationwide store my first guest is
Cheryl Claude she is an assistant
manager or rather she was an assistant
manager at Toys R Us in Woodbridge New
Jersey she's been with the company for
33 years and is one of the thousands of
Toys R Us employees who have not
received severance pay
since the store closed she is helping to
lead the movement for severance pay for
33,000 laid off employees of the
toys-r-us company this movement backed
by rise up retail also calls for greater
accountability of the Wall Street
private equity firms Bain Capital and
KKR that were responsible for the
bankruptcy and liquidation that we're
going to be talking about our second
guest is Charles Kahn is an organizing
director at the Strong Economy For All
Coalition he has many things to his
credit but the one that caught my eye
that I want to share with you is that
he's a leader with the hedge clippers a
national organization dedicated to
shining a light on the damage that
private equity and hedge funds have on
our communities and making sure that
they are held accountable welcome
Charles welcome good to be here thank
you okay so let's start for our audience
tell us what happened to the toys-r-us
corporation and what it meant for you
Cheryl why don't we start with you well
I've been with the company 33 years and
when 2005 when KKR Varnado
and Bain Capital took over our company
they just drained us they just took all
our money invested it and just drained
it and that's they took everything from
us I mean everything including your job
my job itself and made us go bankrupt
yes just a simple question did the
company look like it was doing well that
your job was secure that your future
looked pretty good in all the years that
you were there leading up to this
toys-r-us was profitable yeah they made
11 billion dollars last year
11 billion dollars nobody of your hold
the hole yeah absolutely
absolutely I thought I was gonna retire
from the company right so you didn't
regret your decision to work with them
absolutely not okay absolutely I thought
I was gonna retire from the company I
felt I felt my job was secure and when
did you kind of get the message oh
something's really wrong here in 2005
when we when we didn't have
we didn't have picnics we used to have
all this stuff in 2005 every we didn't
have anything anymore
okay and I think part of what happened
is you know when when Bain and KKR and
Vornado took over they changed the the
soul of the company instead of investing
in their workers they decided to charge
exorbitant fees and enrich themselves
and in the end that's really the story
of what happened to the company instead
of investing in their workers their
workers used to have better benefits
there were certain workers used to have
stock options instead of that there were
fees they didn't tell the workers what
was going on with the company and
ultimately the debt that they loaded the
company up with is what led to an 11
billion dollar a year company filing for
bankruptcy for those who don't know the
familiarity with it this is a fairly
common occurrence in American capitalism
in which sometimes people called
corporate raiders or words to that
effect see an opportunity to borrow a
ton of money and buy a company from
whoever owns it not with the intention
of keeping the company going not with
the intention of growing the company but
with the intention of making a lot of
lenders very wealthy by paying huge
interest fees for the money that used to
borrow the company and paying themselves
a lot of fees to manage the company and
then if it goes downhill if the next 10
years it disappears as long as they've
gotten the interest payments and the
fees along the way they're happy and the
loss is to the community that doesn't
have the store to the workers that don't
have a job and to the local communities
that don't have the tax payments at
stores that are successful make and in a
sense you particularly you sure are a
victim of how this system how this
system works tell me how much blame do
you put for this on the people who had
the company before and how much do you
criticize Bain KKR and the other
came in since what happened in 1905
sorry and 25 seems to be a crucial
moment in changing the history of all
this I mean I think what Cheryl will
tell you what other workers will tell
you is that the company really changed
direction in 2005 that's really when
Toys R Us began this downward spiral
right Vornado Bank acara they forced
them to sell the the land that their
stores are on to pay rent you know in
any homeowner would know that rent is
not is not what you want to be paying
they change the culture they charged all
of these fees and I think the blame
squarely lies on them and that's the
story that we've heard that is what the
facts have represented and that's why so
many elected officials and so many media
outlets have come out with really strong
support of the workers because it's so
clear what happened and it's also really
clear that didn't need to happen it was
excessive greed that caused it to happen
they can make money another way in this
system these people can use borrowing
and all the laws that exists to do this
I mean they're free to do it and you
were a spectator you and the other
workers in a sense were a spectator to
your own situation unraveling on you
what did you do how did you handle those
years what did you tell yourself as this
was unfolding I just told myself to just
keep doing I mean I had to stay with the
company I mean there was nothing that I
had to supply my work to live employees
I tried to keep the employees happy and
keep moving
I stayed to the very very end because
that was that was me I worked hard I
stayed to the end
I stayed to the June 30th I was the one
that locked that door when I locked that
door put the key in the box that's that
was me I worked I worked very hard for
that company to walk away with nothing
and that's what they literally did they
don't you you're done yeah and that
actually there was no other no other
manager in the building it was me in the
liquidator we boxed up the registers put
the key in the box walked out the door
that was it how did it affect the other
workers around they didn't even want to
work anymore they came in left I mean
they they didn't have the will to work
they said how are you
happy I said I have to be happy this was
my life 33 years I spent in that
building I've worked in four different
stores in the 33 years three different
stores I worked in one store for 28
years and it's a total of 33,000 people,
33,000t employees, more or less in your situation,
absolutely all over the country all over
the country and did the company do
anything they did nothing for us they
gave us 60 days 60 60 days to work and
that was our that they said that was our
severance pay 60 days they gave us work
yeah and I think did you have to come in
to work though yeah that was the only
pay they were giving us it was 60 days
worth the work and I said I think what
was another narrative that's happened is
that last year in was a December they
gave some work workers the option to
leave and take severance pay
what they also said is that if we have a
strong holiday season the company's
gonna pull through so a lot of workers
like Cheryl have dedicated their lives
to this company decided today right and
when the company went under right what
is but after the holiday season they
were still telling the workers we're
gonna take care of you you know
everything's gonna be okay and then the
story changed and that's why so why all
of those 3,000 workers are fighting for
for what they're owed
right they were promised severance pay
they were promised some kind of
restitution for the for putting their
lives into this company you know working
in retail you miss holidays you know all
the holidays where most of us go up to
shop or spend time with our families
they're there they're punching their
time cards it's like the dedication the
dedication I had with that company
I miss my daughter's quit high school
graduation my father died was in
February I was out and my father passed
away in February and then I came back to
work that week and that's what they told
me that I didn't have a job after that
you know this is an old story the
companies never want to tell the workers
the truth absolutely because they don't
want you to leave on your skin that's
right they want you to leave they're
scared
so that's why the funny stories one way
or the other or the possibility holds a
little out for you in the hope that
something will survive so that they can
make the break when it's convenient and
profitable for them rather than for you
that's why in a number of European
countries there are strict laws that
require an employer to notify six months
or a year in advance so that the burden
of the adjustment is not entirely on a
on a labor force they have to take the
risk also of what it is they're doing to
the community in this country they don't
have to do hardly anything and so the
chips fall and it's a social disaster
let me ask you a couple of questions
was there any involvement when workers
brought in in any way to try to deal
with the situation all the way they were
bringing people in a month before we're
getting ready to close just to cover and
the people that were leaving temporary I
thought that was disgusting because we
couldn't hold the people because
everybody was leaving because they were
they were angry I mean how could I mean
I felt bad for the temporary people that
were coming in how do you bring
temporary people in until they got
thirty they used to work just ringing
registered that's all they wonder for
and to clean the store I just really
felt bad for the people and they said
how can you be so happy because that's
the kind of person I am even though
we're closing what about the government
were there any governmental supports to
help was there anything that either
local state or federal government was
able or willing to do to intervene and
do something about a disaster for 33,000
people and the communities they come
from so I think that elected officials
and many government officials have posts
through the bankruptcy announcement come
to stand with the workers what we're at
where we're also advocating for is is
not just for the workers to be paid what
they're owed but then also what can we
do and what should we be doing to
prevent this from happening in the
future because toys-r-us is another
victim in
long story of greed confirm Wall Street
on and on the part of our economy and if
we want to make a change to our economy
our financial system to really talk
about what capitalism looks like in our
country these elected officials that
we've been working with like Bernie
Sanders who's come out in support like
Cory Booker who's in New Jersey where
Cheryl lives and they've come out and
support and we're talking about changing
laws right to outlaw leveraged buyouts
right that put that saddl companies with
unsustainable amounts of debt to turn
private equity into joint employers so
they're also responsible right they
can't say Oh hands off we don't we don't
own the company anymore
and then also governors like Mark Dayton
in Minnesota right Bain KKR they have
hold billions of dollars in pension fund
money right that's that's how they make
a ton you know these that's how they buy
their Rolls Royce right it's pension
money and governor Mark Dayton in in
Minnesota ceased all future investment
in KKR until an investigation is done
they are doing what they can to hold
these Wall Street firms accountable and
I think what we'll need to see in the
future is more kinds of action more
kinds of commitment and more like that
official of standing with workers so we
can start to not only change the
narrative but change that the tangible
circumstances that so many American so
many workers are facing am i right to
infer from what you've said that if the
workers themselves owned and operated
Toys R Us
you would never have sold it to okay you
wouldn't have done it because you would
have understood in a sense absolutely
what was in store for absolutely
absolutely it's something for people to
think of absolutely we've come to the
end of the first part of our
conversation I want to thank you both
for sharing this story it's a sad story
but it can have a good ending if people
learn from it and I want to thank all of
you for watching I'm finding this is
important the story I hope as we did and
I want to remind you that
this conversation and this interview
will continue on our patreon channel
patreon.com slash economic update and I
hope you will join us there to continue
it otherwise I look forward to speaking
with you next week
