Welcome friends to another edition of  Economic Update, a
weekly program devoted to the economic
dimensions of our lives,
jobs, debts, incomes, those for our kids,
and those looming down the road.
I'm your host Richard Wolff.  I've been an
Economist, the Professor of Economics all
my adult life ,and I believe that has
prepared me to present to you the kinds
of economic analyses and updates that
this program specializes in. So let's
jump right to it. For seven years now the
citizens of California have been
battling over the identification of who
is contributing to political campaigns
there are those who believe that it is
an infringement on the freedom to donate
and use your money to be forced to
disclose who you are to the voting
public when you give money to a
candidate and there are those as at
least as upset if you like who believe
that it is everyone's right to know
who's funding whom as part of what you
need to know when deciding how to cast
your ballot very recently the
legislature in California by a
supermajority more than two-thirds
passed the California disclose Act which
is now awaiting the governor's signature
to become law if the governor doesn't
sign it it will not become law unless
and until the legislature might override
is not doing so so the people of
California in a sense are reaching the
culmination of a struggle and dispute a
debate over disclosing campaign finances
my position here is not to urge you one
way or the other that's up to you and
whatever decision you have to make but I
do urge you to take this vote seriously
to take this whole situation seriously
in terms of your support for one or
another candidate for one or another
group not only because however this
comes out will affect the politics of
California but as has happened before as
California goes so well may much of the
rest of the country the implications are
national and because of the importance
of who is paying home in our political
system the impact is global so much
depends on what is happening now you can
find out what you need to know by going
to various government websites that
inform you about these issues there's
also a website called CA disclosed dot
org of those who want the governor to
sign this legislation there are groups
opposed this information is readily
available and again as a citizen of the
world of the United States and other
state of California it's a very
important issue and I hope you will cast
and inform the ballot one way or the
other let's jump into the updates for
today and the one I want to start with
is one that I think is of enormous
importance to the American economy and
hasn't got anywhere near the attention
it should have gotten let me start with
the most arresting statistic of all the
number of retail stores scheduled to be
closed during calendar year 2017 in the
United States is 6,400 stores that is a
cataclysmic closing of the retail sector
of the American economy
it means enormous losses in wealth think
of the thousands of empty stores think
of the hundreds of malls that are now
effectively defunct or will soon be
malls with enormous investments in
buildings parking lots
'we schedules traffic patterns all of
this law think of the tens of thousands
of jobs retail jobs lost to people who
no longer go to work in a store that
isn't open think about the lost
opportunities what else could have been
done with these malls
if we had known if we had had some
economic foresight which many people did
if we had done some economic planning
which very few did we might have been
able to anticipate how to make good
community use of an abandoned mall a
mall that could no longer function as a
store in the lives of the people the
workers the customers and so on I want
to drive home what some of these
closings are and give you the names
because it will affect you and you need
to know and the coverage as I suggested
is woefully inadequate the biggest
single closing scheduled for this year
RadioShack plans to close 1430 stores
next the Payless group 808 store
closings the escena retail group now of
course some of these names don't mean
much to you so let me tell you what
Athena is the owner of well I mentioned
only two so you get the idea and Taylor
Lane Bryant those are parts of the
Athena group they're closing six hundred
and sixty seven of those stores the
limited a major clothing outlet is
closing 250 family Christian closing 240
Kmart 230 JC Penney a hundred and
thirty-eight and I could go on and on
and on your life those of your friends
and relatives are all going to be
affected by the lost tax revenue of the
communities you live in as these stores
close by the lost eight pack
sales tax revenues as they are not
anymore paying sales tax since people
either now don't buy or buy through
internet distributors who can escape
many of these taxes etc etc the impact
will be everywhere and I'm not even
talking about the visual impact of
driving your child to school passing an
empty abandoned mall with weeds growing
up through the cracks in the pavement of
the parking lot this is a catastrophe
economically speaking it should have
been planned for it should have been
developed over time it should have been
made easier for the people immediately
affected we live in an economic system
that doesn't do that planning the
preparation it just lets the chips fall
where they may and please remember every
corporation that made the decision to
close these stores explained that their
profit and loss situation required this
decision that's what they said profit
drives the decision profit calculations
whether they're right or wrong is really
no one's business that would probably
never know but profit calculations by a
tiny group of people led to the decision
to close 6,400 retail outlets in the
United States in 2017
let me turn next to another important
story economic update of this week
housing starts fell eight point eight
percent this last month the second
monthly drop in housing starts why is
this important it's important because
when we start a house when a builder
begins to build a house a whole set of
economic transactions is set in motion
it's not just the people hired to build
the house important as that is it's not
all the jobs for
people who are bringing building
materials to the building site from
wherever they're manufactured lots of
people and it's not only the immediately
affected nearby communities
what's also set in motion our demands
for furniture because that house will be
built in a certain number of months and
then it will be sold and then it will be
occupied and whoever the new occupants
are will be buying new furniture
probably the house builder or those
people will be buying appliances an
enormous industrial boost is given when
housing starts proliferate that's why
it's really bad news when for two months
we not only don't get rapid growth we
get a decline in housing starts so I
looked into it in order to be able to
offer you an explanation for why at a
time when the government boasts that
unemployment is shrinking more people
have jobs we're supposed to think oh
this is a turnaround economy and then we
get this statistic housing starts drop
well so here's the explanation which the
housing industry is perfectly willing to
offer and I'm just passing it on to you
the vast majority of people getting jobs
are getting jobs that have little pay
few benefits and no security guess what
they're not gonna buy a house they're
not gonna go in on the loans and the
risks of homeownership with the income
situation as precarious for them as
modern jobs of the sort that we're
giving people actually are so it turns
out that what the building industry is
doing is building fewer houses but much
more expensive houses the housing
industry is going where the economy is
and in the economy
it's a shrinking number of very wealthy
people who are buying houses because
they can and a growing number of the
mass of
Americans with or without a job who
cannot do that who cannot buy a home who
cannot raise the downpayment who cannot
take the risk of a 20-year mortgage etc
etc etc it's another sign that when you
allow the inequality of income to reach
the dimensions it now has in the United
States there are consequences down the
line from doing that and one of them is
this bad news from the housing market
which is in turn a reflection of the
inequality of income and will have
effects making that inequality worse and
now another this economic update puts me
in the position of even coming close to
celebrating something done by people
like Walmart or Pepsi Cola or Viacom or
tarjay I can't say Target tarjay here's
what they did
these corporations I just named are
among 800 major American corporations
who wrote and signed a letter to the
Trump administration urging the Trump
administration to reverse its decisions
about the Dhaka young people the DAC a
those people who were brought into the
United States illegally as children
young children and who have grown up as
American children and many of them have
jobs there and so on and they are
threatened with being pushed out by what
the Trump administration and the
Republican Party at least has talked
about it's being fought over inside
Congress right now as to what exactly
will be done they were interestingly
joined these 800 corporations by Colin
Kaepernick who donated $25,000
of his own money to help the DAC a
project of giving those people allowed
to stay here in the United States it's
an interesting coalition between these
corporate leaders and others who feel
strongly about it I wanted to offer an
explanation immigrants like those
children or the children of immigrants
have been historically shown to have a
very profound ability or let's put it
differently a willingness to work at
wages and under conditions less
attractive than those Native Americans
normally insist on in other words
Walmart RJ the others they know
something they know that the children of
immigrants have modest expectations are
willing to accept standards of living
that others might not
they're also as the children of
immigrants have traditionally been very
eager to be successful in the new
country driven by their parents to be
successful to learn English really well
and to succeed and to make a really good
start in the new country to which they
have come often under very difficult
circumstances in other words highly
motivated and not expensive from a
corporate point of view and it's
interesting that they would want to go
against the Trump administration
although admittedly doing that is now a
popular activity for most Americans one
way or another before I go on to my next
update I want to remind you that we
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let's return a week ago the Census
Department here in the United States
issued a report that got a lot of
publicity because it pointed out that
over the last two years the level of
poverty in the United States has gone
down even though for the last 20 or 30
years it hasn't had that kind of
experience that we have had a rise in
the average or median income level of
American families again noteworthy
because the previous 30 or 40 years have
seen stagnation at best and decline at
worst and I even made a comment a week
or so ago where I said it is remarkable
that you get a lot of attention when the
numbers go up a little bit and you never
got that kind of attention over the long
decades when it was going down but I
want to highlight another part of the
Census Bureau's report because of what
it says about the
American economy today and where it
points into the future this has to do
with children in poverty because while
the poverty rate went down a little bit
for most but not all Americans the child
poverty rates in this country are so
extreme that they need to be understood
and the implications of them need to be
understood so let's go for white
Americans the percentage of children
white children living in poverty and
let's remember poverty is a strange idea
in this country the government keeps a
record roughly if you're a family of
four and you earn less than $24,000 a
year you're considered to be in poverty
of course if you make twenty five
thousand dollars a year and you live in
most American cities and you're a family
of four
you've got a hard road to hoe but you're
not considered in poverty so keep that
in mind we're talking about in poverty
meaning living in a family where a
typical family of four is earning twenty
four thousand and it's reduced of course
if it's a family of three or two and so
on white Americans eleven percent of our
children one in nine white children is
living in a family defined as in poverty
Asian Americans 11 percent same in Asian
Americans and white Americans now let's
turn to Native Americans black African
Americans and Hispanic Americans let's
start with Native Americans children 34%
are living in poverty more than three
times the rate of white and Asian
Americans blacks thirty-one percent
Hispanic twenty-seven percent
besides these numbers showing a
disparity between the poverty endured by
children of color accepting Asian
Americans
and whites besides the jarring
implications of all of this for racial
justice for equality for any notion of
justice let's remember I'm talking here
and I did this deliberately about
children so the the option of blaming
the child for the poverty it lives in is
really not available since the children
didn't choose where to be born to whom
to be born under what conditions to me
more children were born into poverty and
massively more so among African American
Hispanic American and Native Americans
every study that I know indicates that
the prospects for those kids doing well
in school
doing well in their social adjustments
getting the motivation getting the time
having the safety having the supports to
make it in life the odds are much lower
because of the poverty into which they
are born through no fault of their own
and if you wanted an indicator that
we're having gonna have trouble in the
years ahead
if you condemn the children of this
society to these kinds of conditions
you're guaranteeing problems galore in
the years ahead this kind of an
inequality and this kind of a level of
poverty demand a massive intervention of
resources and people to once and for all
break this pattern otherwise we will
continue to see the results of an
inequality this stark imposed from the
earliest years of a human beings life in
the United States it is just this side
of criminal to have such a situation and
to have a government these days and
unfortunately for quite a while that
either doesn't recognize this doesn't
want to face it or at least does not
want to raise and apply the resources
needed to do something about this we're
way beyond small measures piecemeal
measures little reforms this kind of an
imbalance of an inequality and of a
level of of denial to innocent children
is something that has to be addressed
massively or else you don't solve it the
next update I try to think of a proper
heading for it I came up with only in
Trump's America for lack of a better one
the Commodities Futures Trading
Commission you may never have heard this
it's a well established Commission of
the United States government in
Washington one of its activities is to
supervise the financial markets that is
the markets in derivatives and other
fancy but very important mechanisms of
the financial world the world of banks
what banks do how they trade with one
another what risks they take for what
kinds of returns what products they
develop in their offices and so on and
on the 25th of September this last week
it was announced by them by the
Commodities Futures Trading Commission
that they were changing their policy
they were going to change the policy
inherited from the Obama administration
to make it suitable for the new Trump
administration and that before I tell
you what they've done because it will be
right up there in the you can't be
serious category before I tell you it's
an important example I guess that's the
word I want an example of what is
happening mostly below the radar in
other words we have a president who
makes a spectacular speech or a
spectacular tweet and gets a lot of
attention and hoopla and people yelling
and screaming for him against him and
all the rest but meanwhile most of the
business of government isn't
it's what is done in these Commission's
and officers that departments of this or
that part of the government changing the
rules applying them in a different way
that's what's really shifting America
and in a way that has more impact on
people than what the particular head of
the government might be saying or
yelling or tweeting etc as going on
everywhere I want to give you one
example but let's get back the
Commodities Futures Trading Commission
it announced it is now going to rely
less on directly supervising the banking
industry excuse me and I'm now going to
quote it's gonna put more reliance on
banks here comes the quote self
reporting of their own misdeeds I have
to say that again because probably you
don't believe what I just said so I want
to say it again the Commodities Futures
Trading Commission in the words of its
chair is changing its policy to rely
more on banks self reporting of their
own misdeeds he gave a speech the
director did in which he said there are
a lot of incentives for the banks to be
open and transparent about what they do
folks you know from this program if
you've been listening that I have tried
to catalogue for you over the last
several years the extraordinary misdeeds
carried out by the large banks in this
country money laundering for which they
have been found guilty and paid huge
fines manipulating global interest rates
the sole so called LIBOR scandal for
which they have been found guilty and
paid fines overcharging all kinds of
fees from bounced checks to everything
else for which they have been found
guilty and have paid fines for having
misbehaved in the whole mortgage crisis
back in 2007 8 and 9 for which they have
been found
guilty and they've paid everything we
have seen oh and money exchange the
foreign exchange markets they
manipulated those everything the major
banks have done they have behaved badly
unethically and or illegally paid huge
fines failed to self-report for the
government now to say we're going to
rely on self-reporting it boggles the
mind if i wish i could come up with a
better phrase but it tells you something
fundamental then after all the hoopla is
done this government is doing something
for its friends and if you don't notice
it doing much for you draw your own
conclusions we've come to the end of the
first half of this program please stay
with us after a very short intermission
we will be right back
you
