Welcome friends to another edition of
economic update it's a weekly program
devoted to the economic dimensions of
our lives
jobs debts incomes crises of all kinds
that beset the capitalist economy that
we live in and live under and live with
I'm your host Richard Wolff I've been a
professor of economics all my adult life
and my hope is that it trained me to be
able to present to you an understandable
analysis of what's been going on in the
economy we depend on I want to begin
today's program with a recognition that
it is the 50th anniversary of the death
of Martin Luther King a man who devoted
himself as we all know to doing
something to correct one of the gravest
in justices of our country's life and
history racism in all its forms and all
its consequences Martin Luther King
learned in the course of his efforts to
deal with that problem that it was
inextricably intertwined with another
problem and that is an economic problem
and that's why I'm talking about it the
problem of having a mass of people white
and black in a subordinated position as
workers confronted by the enormous
wealth an enormous power of a tiny
minority of people that own and direct
the enterprise's upon which we all
depend for the output they generate and
the jobs that we need and Martin Luther
King 50 years ago made the ultimate
sacrifice of his life to pursue that
connection that's why he had gone to
Memphis that's why he had worked with
the garbage drivers and the garbage
picker uppers in that city to correct a
problem
that afflicted them both as
African-Americans and as workers I think
if he were here with us today he would
recognize what I have to recognize which
is a great deal of what Martin Luther
King sought to achieve remains to be
done because this country has been
unable and unwilling under the
leadership that has governed it to
really address the inequality and the
injustice that has accumulated across
our history in an effective way which is
why the wealth average wealth of African
Americans is lower today than it was 20
years ago a statement that is stunning
in the history of modern capitalism and
attests more loudly than anything else I
can say to a problem that remains
central and foremost to this country's
life the first update I want to share
with you today has to do with things
going on in France masses of people
hundreds of thousands perhaps millions
have been in the streets of France not
just Paris but in all the cities and
towns across the country vast
demonstrations against the government
against the presidency of Emmanuel
macron this man who once was a socialist
politician in his country has decided
that the French economy needs help no
one disagrees on that that the French
economy needs to be given boosting and
support to compete effectively in the
world and nobody much disagrees with
that either
but here comes where the disagreement
arises how do you do that and his
decision is to bring you'll love this
flexibility to the labor market let's
look at what those fancy words mean he
has proposed labor reform
what they basically amount to is to
allow employers to fire employees pretty
much at will up until now the working
class of France has imposed rigorous
limits employer cannot fire employee
without providing reasons can be brought
to court if those reasons are not
acceptable and will have to pay big
fines if it was found that the firing of
an employee was unjustified these are
rights of the laboring people the vast
majority Mr. McCaul wants to cut them
back he wants to make it easier for
employers to hire and to fire and there
are a whole host of other things like
that he wants to do because this will
make business more profitable and that
will help the French economy he says
masses of people are in the streets to
say no no no no no and before I tell you
what the alternative they proposed is
let's first face what I've just said to
you because similar things have been
going on for years in the United States
but there are no masses of people in the
streets to fight them to fight the
damaging of working people ten different
ways we don't do that in this country
nothing like the French and we ought to
face what that means
what participation in democracy means
what the effect of all of this means let
me remind you what the French working
class has achieved they have a work week
much shorter than here in the United
States they have a completely
nationalized health insurance program
that gives everybody complete health
insurance from the day they're born to
the day they die they are given by law
five weeks of paid vacation for every
working person
that has to be paid by their employer
they have a system of daycare provision
for parents that has no rival in the
world I could go on but you get the
picture the decision by mr. McRoy is an
attack on the working class and let me
explain to you why because to
reinvigorate the French economy there
are other means than attacking the
benefits of the majority of people let
me give you just a few if you didn't
allow the highest-paid people in France
to walk away with tens of millions of
dollars that money would be available to
do all kinds of things in the economy
that would help the economy improve
technical education provide more people
with access to college buy more modern
equipment for your production here's
another way to boost the French economy
lower the prices of French goods in the
markets of the world people will buy
more of them and how might you do that
by lowering the salaries of the people
at the top would take a disproportionate
amount and if you didn't have to pay
them the big salaries just say 30 times
what you pay an average worker rather
than 300 you could make savings on the
prices of goods and that would make
French Goods more competitive you get
the picture there are a lot of ways to
boost an economy watching the mass of
people after they've won certain
benefits that shape their lives doesn't
have to be the way to go and the French
people are letting the French government
know no business as usual schools closed
the rail system closed students have
walked out of school grocery store
clerks have shut down the stores you get
the picture it's almost May 2018 50
years ago was something called May 68
when workers and students didn't just
close down this in that industry the way
they're doing it today
they closed down France it's springtime
and capitalism is shaking let me turn to
another economic update very brief and
scary but I have to tell you about it
the crash in 2008 the crash that
reverberated to this day as capitalism's
second worst breakdown in 75 years we're
still only number two to the Great
Depression of the 1930s that was brought
on by the collapse of financial markets
this is a fancy way of saying the
collapse of mortgages people had been
given mortgages who couldn't afford them
whose salaries weren't big enough to
sustain them those mortgages were then
bundled together in something called
mortgaged back securities that were sold
to people who invested in them who
invested in them not understanding that
the people who had taken out the
mortgages which they now owned wouldn't
be able to pay the monthly mortgage
pretty soon and that all blew up in 2008
and for a few years after that mortgages
were not bundled into securities at
least not the mortgages of people who
couldn't pay something called sub-prime
mortgages mortgage taken out by people
whose credit wasn't good because their
income and their family circumstances
made them for bets to be able to own
their own home the last two years has
seen a sudden resurgence call this
capitalism that can never learn and
they're doing it again
the growth in subprime mortgage-backed
securities being marketed in the world
has soared in the last two years
suggesting that memories don't go back
very far we're heading down the same
disastrous Road that we have been before
another statistic that came out this
last week in more than half the states
of the United States
students now pay more than the
government does for tuition at public
universities ever since the end of World
War two the importance of educating
young people in America the importance
to them to their families to their
communities and to our economy because
as you all I hope know the most
important resource for the future of the
economy of the United States in the
larger world economy hinges on the
quality and the quantity of our trained
young people and the number one
institution that trains young people in
the United States our public colleges
and universities over three-quarters of
all graduates of college and university
go to public colleges and universities
and that was considered a social benefit
you know like a public park or like
anything else the government does for us
the roads the harbors the security all
of it we benefit all we share the cost
that was thought to include higher
education just like it already includes
Elementary in high school and so on but
we're pulling back in this capitalist
country the rich don't want to pay
anymore so they've got the politicians
cutting their taxes and to get away with
it cutting everybody else's just a
little so they don't pay attention so
there isn't the money and so we're not
gonna support our college students we
need them more than ever our future
depends on them but in this strange
capitalism we are shooting ourselves in
the foot so the first time in half the
state's students have to come up with
their own money to go to college more
than the government kicks in to help
them crazy behavior self-destructive
behavior and like with all
self-destructive behavior you have to
ask what leads people to do such a thing
to themselves in the end
an arrow mentality of saving my money
and holding on at the expense of the
society which is going to punish you for
that sad but it's in our society
question will young people learning
perhaps from the French do something
about this
well teachers are I want to shout out in
my next update
I have celebrated what it was
accomplished by the West Virginia
teachers few weeks ago when they pulled
off a fantastic strike across every
single County of the state of West
Virginia one themselves a five percent
wage increase and no messing around with
their health benefits and boy was the
lesson learned over the last week or two
in comes the news Oklahoma Arizona
Kentucky if I had more time I'd go
through the basic details on each of
those three states but those very
different states Oklahoma Kentucky
Arizona have one thing in common their
teachers are not going to be told no
they're making the demands long deferred
that they get the respect as educators
that they deserve and that they can do
their job to educate the young people
even if the political leadership focused
on tax cuts doesn't care anymore
serving the big businesses whose
interests are abroad whose interests are
somewhere else and who don't care
anymore about the mess they leave behind
as they move their business somewhere
else I want to turn next to a wonderful
piece of research that was actually done
by the CBPP the Center for Budget and
Policy Priorities I've always forgotten
them CBPP org if you're interested they
do a wonderful chart
I just want to report to you about to
chart on poverty in various countries
but it does something
unusual it doesn't just measure how much
income people earn and then decide
whether you're poor or not it looks at
how much you earn but then it asks how
much of that do you pay away in taxes
and how much in addition to that to that
do you get in the way of social programs
rent vouchers food stamps whatever it is
in order to get a sense of after taxes
and what are called transfers money from
the government to people how do you
shape up in terms of the poverty and in
every country that they looked at the
these folks the poverty rate before you
took into account taxes and transfers
was much higher than what it was when
you took them into account because after
all the point of the transfers is to
reduce poverty to alleviate poverty so
let me tell you about these countries
and in all the cases these are countries
that are considered high-income
industrial developed countries the
country that takes care of its poor
people you might say best is Denmark
there it is again
their poverty rate after you take into
account all the transfers 6% that starts
going up France it's 8% it's still
pretty good
Ireland 9% okay not so great United
Kingdom 11% but then we get to the
highest percent the country that
accomplishes the least by means of its
tax and transfer system to alleviate
poverty you guessed it the United States
18% one out of five people in the United
States is qualified as poor that means
they a household income that is half the
national median income it's the bottom
quarter of the population basically one
out of four maybe one out of five
American families remains
poverty even after all of the food
stamps all of the vouchers for rent all
of the help that they get we still
ranked at the bottom Wow before I go on
I want to remind you as I always do that
we maintain two websites where all of
this kind of information and much more
is available to you
the first one is democracyatwork,
that's all one word, democracyatwork.info, and the second one is rdwolff
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I also want to remind you that we have
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in the remaining time we have I want to
bring to your attention a very
remarkable researcher whose work I urge
you to look at her name is Virginie the
French version of Virginia and her last
name is pickle time I'll spell it for
you pe
our ot IM Virginie perotta she is a
professor in the business school at
Leeds University in Great Britain and
she has written many books and articles
and research reports that I want to
bring to your attention because she
studies worker coops and in particular
she studies what the difference is to a
community that has worker coops
as the way they've organized businesses
rather than top-down hierarchical
capitalist corporations she looks and
compares these two kinds of corporations
and what she finds and what she
documents in real systematic way is the
superior benefits to the community the
greater efficiency and the greater human
satisfaction people derive from
democratically organised enterprises if
you want to see that research done go
find the work of Virginie Perotin,
P E R O T I N, and Business School professor
at Leeds University in Britain I've left
some time to give you this last update
because it teaches you so much about the
American economy this last week
President Trump proudly announced a new
trade agreement with the country of
South Korea an important trading partner
and one of the items in that agreement
struck me and I want to tell you why it
has to do with tariffs on trucks it
turns out for those of you who may not
know that the United States has imposed
tariffs on trucks imported into the
United States for the last half-century
since 1963 to be precise the tax is
enormous this tariff 25 percent so what
every cost to produce a truck in any
other part of the world and bring it to
America we have to pay
that price that it cost to produce the
truck with a profit to the company plus
25% tax or tariffs on it this is a way
to do what it's a gift to the American
truck producer because it makes foreign
competition too expensive
they can't compete because we have to
pay an extra 25% for a truck that comes
in that's 25% we don't have to pay if
the truck we buy is made here in the
United States the idea that mr. Trump
pushes and people like him that we are
only now threatening trousers because
other people discriminate against us is
nonsense we like every other country
manipulates foreign trade as much as we
can get away with
we are not some innocent lamb that has
been victimized that's a silly fakery
that we are adults and shouldn't indulge
in anymore so I want to tell you about
trucks because it's so important here we
go trucks in the United States account
for 15% of all vehicles sold okay the
three best selling vehicles in the year
2017 were the following the Ford
f-series truck number one the Chevy
Silverado number two and the RAM
Chrysler car number three they were the
most profitable sources of money for the
automobile companies and you know why
because they're protected by a tariff
they could jack up the prices of their
trucks because there was no danger that
cheaper better trucks could come in
because they were held out because they
had to pay an import duty a tariff of
twenty five percent you want to know why
their advertisers fill the air in this
country over the last 50 years
every TV show imaginable with a cowboy
getting off the back of his truck or
putting a horse on it or otherwise
looking very manly we advertise trucks
to the American people who bought them
like it's going out of style for one
reason because of the profits that were
involved in trucks and those were only
there because we put a tariff wall to
prevent others we made other truck
companies come here into the United
States to produce their trucks here so
they wouldn't have to pay that and we
think that's created jobs it did for a
few but the profits from all of that are
in the hands of those foreign companies
who can and do use them elsewhere in the
world what I want everyone to understand
is something as American as the truck is
a protected device we have paid more for
trucks produced in America than we
should have and then we needed to we
could have had trucks much more cheaply
if we will have allowed foreign truck
companies to compete on a level playing
field with Americans on 4th of July we
have speeches about competition and how
our leaders believe in competition don't
be fooled the American truck culture
which by the way has a lot to do with
guzzling fuel because the fuel biting
and eating of a truck is much worse than
of a car remember it the pollution we
have the use of fossil fuels we have has
been worsened by the truck which has
made profits for the few companies at
the expense of the prices we all have to
pay they got protected you got ripped
off and that's because we use tariffs
that way and when mr. Trump says he's
going to use tariffs that's what he's
doing - this has nothing to do with
protecting American jobs this has to do
with making a lot of money and charging
Americans more
or for polluting more and all that goes
with it it's important to understand how
the economy really works so that you
don't get taken in by fairy tale stories
about how it works that make us all
beneficiaries rather than understanding
who the winners are and who the losers
are in the way capitalism as a system
works and it works like this all
countries manipulate trade all that's
going on now is that mr. Trump wants to
manipulate it some more and to muscle
his way forward which he may or may not
succeed at but don't be fooled this is
not new this is not helping us all this
is an old game being run on you again
we've come to the end of the first half
of economic update I hope these updates
have been interesting and provocative
that's what they're designed to be
please stay with us in a very short time
we will be back for what I believe will
be an extraordinary interview with dr.
Harriet fraud having to do with with an
important news story connected to stormy
Daniels that I think you will all find
intriguing
you
