Welcome friends to another edition of
economic update a weekly program devoted
to the economic dimensions of our lives
income jobs debts burdens for ourselves
for our children issues events trends
I'm your host Richard Wolff I've been a
Professor of Economics all my adult life
and I hope that that has trained me to
be a useful interpreter and presenter of
the economic changes swirling around us
today's program is a little different
from the usual because it's an overview
we're trying to take stock of an economy
as we move out of one year 2017 and now
into a new one 2018 it's important for
us to talk about the major events and
the major trends that are part of last
year's history and part of what's
unfolding now to get a better sense of
where we've been and where we're going
so I've picked several of the key events
and trends to bring to your attention to
give you a sense as well of how the
economy is shifting one of the big
things that happen at the end of 2017
was a decision by the Federal
Communications Commission to end net
neutrality that is to change the rules
that have been governing access to the
internet for all of us and likewise
access to the Internet by all the people
and the institutions that provide the
content which is why we go to the
internet to get that content several big
companies control that access probably
the most important and biggest one is
Verizon and Verizon plays a big role
here because the person who's the head
of the Federal Communications Commission, 
Ajit Pai, used to be a lawyer for Verizon so
now he's in the position of deciding
what to give to his former employer and
if he's like others maybe his future
employer too we'll never know
until that day happens here's the issue
the rules up until now and these are the
rules that are allowed things like
Google and Netflix and so on to become
the Giants that they are today to give
the United States economy a kind of
technological edge that we have been
losing in many other industries they've
all benefited from the rules as they've
been which are everybody has access in
the same way and everybody who produces
content has access in the same way that
is we are neutral we do not discriminate
or be to be more accurate we don't allow
the access controllers like Verizon to
control how we communicate and how we
interact on the Internet under the new
rules these companies will be able to do
that they'll be able to let some content
through and others not they'll be able
to allow us to get some content quickly
and some content less quickly why would
they be interested in doing that well
you know the answer before I tell you
because it will allow companies like
Verizon to charge money for the faster
communication for example to charge fees
for access to certain kinds of content
that they couldn't do under the old
rules so this big struggle that took the
entirety of 2017 actually began earlier
than that was about one group of
companies like Verizon wanting to change
the rules because they make more profits
that way and other companies for example
content providers like Netflix Google
Facebook and so on they were scared when
this conversation began that they would
have to pay fees they would lose profits
so like so many of these big issues it
turns out they're between one group of
companies and another companies have
stand to get more profits by a change
and companies that stand to lose
and they're fighting it out to get the
government to decide and as they fight
it's useful for them to get the public
on their sides so one side tells us all
kinds of good things will happen to the
public if only we do what they want and
the other side gives us the
counter-argument a little wonderful
things will happen to us if we do what
they want and we're supposed to choose
between them well here's my advice as an
economist neither of the two groups that
are fighting those who want to keep the
rules and those who want to change them
are interested in us they are all
profit-making capitalist companies and
big ones to boot they are looking out
for their bottom line and what is likely
to happen is that Verizon will get to
charge money but won't dare charge it to
the major content producers because
they're too big and might find a way
around them so they'll work out a
compromise that protects their profits
and who will be having to pay a bit more
here and there for internet access yeah
you and me because this is an
institution we all now need and they get
that and they're gonna make us pay
what's the alternative deal with the
internet for what it is and by the way
there are countries around the world
already doing that Finland I recently
read about for example absolutely
considers the internet a public utility
like the land like the forests like
electricity and so on it is not going to
allow that to be used as a football
between competing profit ears
it is a public utility and the public's
interest comes first that would be the
way to deal with this rut make the rules
serve the majority of the people what an
idea rather than small groups of profit
ears the shareholders and executives of
one group of companies fighting another
another enormous issue of enormous
historical importance has
then a struggle in the workplace and
this one has been led mostly by women
some men involved too but mostly women
who have brought out of the shadows a
fundamental issue of the working
workplace for all of us and what is that
issue well the way was brought up
particularly in 2017 was an explosion
around sexual harassment and sexual
assaults in the workplace names like
Susan Fowler at the uber corporation
rose mcgowan a leader in the critique of
Harvey Weinstein in the film industry
and perhaps most important, Tarana Burke,
who started the metoo movement, which has
transformed so much of America in such a
short time. What's this all about? Well it
goes far beyond the immediate question
in which men imposed sexual demands on
women and even on some men as well by
using what by using the particular way
we organize business in this country how
we organize factories offices and stores
and what do I mean I mean that we have a
tiny group of people the top executives
the board of directors literally 10, 20,
30, 40 people have enormous power they
can give you a job or take it away from
you give you an income or take it away
from you allow you to move up in the
hierarchy of the company or keep you
down give you an opportunity of a
lifetime or block you from it tiny group
of people with enormous power over the
livelihoods, the jobs, the career futures,
the opportunities of a large number.
Does that sound democratic? No, it doesn't, does it?
And guess what, which should come as no
surprise? If you give that kind of
unequal power to a few, you're literally
creating
the opportunity for them who have that
power, to abuse it, to make demands on
people below them, to meet their needs
sexual, but not sexual too - or else risk
losing a job, or else risk losing
promotion, or else risk losing the
opportunity. The fundamental issue
brought by the women in particular, who
have said this has got to stop,
goes far beyond the immediate demand
stop sexual harassment on the job,
important as it is, crucial as it has
been, because what these women are doing
is calling out the hierarchical
structure of the workplace for everybody.
Why do we allow a small group of people
to have that kind of power over a large
group, with no return power. That should
have been the problem all along, and
particularly in a country that fashions
itself democratic. If democracy is a
valuable thing, then it belongs in the
workplace, which from, which it has been
excluded from the earliest days of our
society. We're not a democratic society,
if we mean to include the workplace,
which is a remarkable kind of thing to
say, in a country that calls itself
democratic, and where most people spend
most of their adult lives at work, in the
workplace.
The women are teaching us that there is
an inequality that has horrific personal
consequences, and you know while the
suffering you go through, if you are
sexually harassed or assaulted, is
unquestionable. There's lots of other
kinds of suffering that are very similar:
a career denied, a career broken, a job
lost, family dislocated because someone
with power has the ability to do that to
you.
and the solution comes immediately if we
had worker cooperatives as the basic way
we organized jobs
if when you went to work you went into a
community run democratically where
everybody who is a employee is also an
employer we're the people who work are
their own bosses
working to divide the labor amongst
themselves everyone holding everyone
else accountable you're not getting
gonna have a few people in a position to
extort things out of other people you
don't even have the employer-employee
dichotomy nobody is in a position to
abuse another as a worker because
everybody who's a worker is also an
employer and everybody who's an employer
is also a worker hiring and firing is a
collective decision not one that is
concentrated in a few people you know in
the human race if you go back and you
read about kings and emperors and czars
people who had power in a whole society
rather like the power that a Board of
Directors has at a workplace you will
remember that you read about things like
concubines and harems and all the ways
that those kinds of people kings and
emperors abused including in sexual ways
their authority we got rid of Kings and
part of the reason was we didn't want
that kind of authority no government
that isn't accountable well if it's
gonna be a government that has to be
accountable to the people what about the
government inside the workplace why
isn't it accountable why haven't we set
up the institution the Democratic
working out of the big decisions so that
nobody is in a position to abuse last
point on this that this struggle by
women across America has brought home
this is not a problem that's going to be
solved by telling people not to
misbehave let me remind everyone that a
few decades ago when we had a big drug
problem in this country we had leaders
saying that the important thing to do is
to turn to the people abusing
and say to them, just say no. Well, we've
tried that 30, 40 years. Our drug problem
today is worse than it was then. Telling
people to just say no doesn't work,
telling people not to sexually harass or
abuse others, not gonna work either. You
have to change the way people are
connected, how they relate to one another,
to stop this from happening and going
away from a hierarchical top-down
undemocratic workplace to a collective
community workplace where everybody is
accountable to everybody else is a way
to reorganize society, so neither sexual,
nor other kinds of abuse are driven by a
system that reproduces that kind of
behavior as these women in 2017 have
taught us so well. The next bizarre event
of 2017 can be called the Bitcoin
explosion what was that about well let's
talk first about the reasonable side of
it as you all know money is something
that is basically produced by
governments and also produced by banks
in the normal way that banks do business
but the banks set up their money by
creating checking accounts and so on
using the government-issued cash in this
country the dollar bill the $20 bill the
hundred dollar bill and so on it has
always therefore been a fantasy of all
kinds of people why can't we have other
kinds of money multiple sources of money
and you know in the United States as in
most other countries we did that for a
while the early years of the United
States as an independent country had
money coming from all sides different
states had money sometimes different
counties within States issued their own
currency if you were doing business
and moving safe remain in the north to
Maryland or Virginia in the south you as
a business person would traverse regions
with different money and you'd have to
exchange the money from Maine for the
money from Massachusetts and then that
money with the money from New Jersey and
that money with the money from Delaware
and so on and then we unified all that
into one money and that always left the
question G how would it be if we had
multiple sources of money again and you
know how unkindly the law looks upon
people who take it into their own hands
to do that by counterfeiting money for
example so it's always been a fantasy
and there's an interesting question
about what would be the economic
consequences of different people issuing
money if it wasn't only the government
Bitcoin begins by saying here here's
another kind of money and let's see if
we can get people to accept it in
exchange for work they do or goods that
they sell will they take another
currency and an electronic currency
Bitcoin as a substitute for dollar bills
or Euros and if they take them will they
be able to spend them on other things so
that it works like money and that's an
interesting question and that began to
be asked by these people who make crypto
currencies alternative currencies or
what you call them and the biggest of
them has been Bitcoin that's the
reasonable side now we come to the
unreasonable side every commodity that
has ever existed
every good that goes through a market
from buyer to seller and so on
has become at one point or another an
object of speculation what do I mean it
begins to be purchased not for whatever
use it originally had but for a very
different purpose it is bought in order
to be resold at a higher price let me
give you an example perhaps the most
famous example were tulips grown in
Holland back in the early 18th century
now tulips had a purpose they were a
flower they were grown by gardeners and
bee
of their beauty they would be purchased
by people to beautify their gardens etc
useful things but then somebody got the
idea whoa if I buy these tulips in the
right way in the right color at the
right time and I wait I could sell them
maybe for more money and then that
person did it and everybody noticed Wow
he bought them for ten and sold them for
twenty maybe if I buy them for twenty
I'll be able to sell them for thirty and
they did and that brought more people in
and they convinced folks look don't buy
these tulips because they make your
garden beautiful buy these tulips
because you're going to get rich quickly
and you know how and why simply because
if you buy it it's going up and you'll
be able to make money by selling at a
higher price and how will you be able to
do that by convincing the person you
sell it at a higher price to that he or
she can do the same and it's just an
upward and onward spiral that's what
happened to Bitcoin it went from
something worth a few hundred US dollars
to something on the order of 20,000 or
more by the end of 2017 and a lot of
people made a lot of money buying and
reselling at a higher price
that's a speculation it happened to
tulips it's happened to gold frequently
it's happened to almost everything all
you need is to get enough people to
believe that they can resell at a higher
price and then it gets going and it
becomes a self-fulfilling prophecy you
suck in more and more people the more
they observe how much money you could
make by simply buying something sitting
on it for a matter of weeks or months
and selling it no work no production no
value-added pure speculation
the Bitcoin phenomena is that and like
every other speculation of its kind it
ends badly we look back on what happened
to the tulips and refer to it as tulip
mania finally as the price went higher
and higher
for tulips it got to a point where the
risk was too high the amount of money
you would have to spend to buy tulips
was so enormous that the risk that it
might not go up simply was too
frightening and at that point nobody
stepped in to buy which meant the last
people who had laid out money discovered
they weren't gonna make more so they
quickly sold it for fear it would go
down and when it goes down the fear that
it's going to go down further makes
everyone holding it dump it and the
price goes down as fast or faster than
it went up everyone thinking of playing
with bitcoins has to understand this is
just another crazy speculation which is
one of the side effects that can be so
disastrous of the institution we call
the market and has to be weighed when we
wonder whether they're not might not be
better ways to distribute resources and
products that buying and selling them
given the potential at any time for the
kinds of crazed speculation bitcoin has
been seen to go through. Before turning
to our remaining updates, I wanted to
remind you that we have two websites,
that we ask you to make use of, rdwolff 
with two F's dot com and
democracyatwork.info. These are websites
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They're ways for you to communicate
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A trend across 2017 is continuing into
2018 has been going on for 30 years now
and that's the growing inequality in the
distribution of income and wealth there
is no end to it in fact it looks and
feels sort of like a speculation on
Bitcoin what do I mean as more and more
of the wealth of the world is
concentrated in a few people at the top
and this has been going on across the
board North America Western Europe China
India it's unbelievable how it is
everywhere the only thing these
countries have basically in common is
the world capitalist economic system of
which they are all an enthusiastic part
these days and it's the capitalist
system that is producing and sustaining
this rising inequality it is a very
serious thing and the connection between
that and Bitcoin is easy to pinpoint the
more you concentrate wealth in the hands
of a few
the less the purchasing power of the
many so the fuel have all this wealth
but they don't invest it in producing
goods and services because the mayors of
people can't afford to buy it the very
inequality destroys itself and
eventually it blows societies up we have
leadership in the world that has been
bought and paid for by the people at the
top with the wealth which is why nothing
is being done to undo it
to reverse it even to stop it we have
the kind of society inequality now that
resembles people on a train rushing
towards a stone wall they see it they
know it but they can't seem to stop it
there's something unspeakably tragic
about all that having said that I want
to point out that Europe is in a
different place
Europe has lost an entire decade from 27
from 27 207 to 2017 is a lost ten years
the European economy collapsed along
with the world
peddle is system in 27 and 28 and it
hasn't recovered until now and
everybody's excited that there's some
recovery actually happening in Europe
now after ten years of decline of lost
production of lost jobs of destroyed
lives countries like Greece Italy Spain
Portugal are living in a economic
downturn that they're only beginning to
emerge from and I of course welcomed
that economic conditions are improving
in Europe and it's not only good for
Europe it helps the United States and so
forth
have less economic suffering but let's
be clear we are recovering from a system
that produced ten years lost for people
who live through it those are not
recoverable for people whose homes were
lost and they number in the tens of
millions
they'll never recover from this the
effects of this will last lifetimes
education that were destroyed
governments that were destroyed wealth
of a society that was destroyed
capitalism is a fundamentally unstable
system and we've just come through a
ten-year collapse even if there is a
recovery what are we doing keeping a
system that works like this are we
waiting for the next calamity the next
ten year collapse the time to act is now
we know the system is unstable we've
just lived through it the last economic
depth update we have time for today has
to do with something that struck me the
state of California has had a very
serious time 2017 particularly with
fires fires in the north of California
and fires in the south you may not know
it but an army a small army of thousands
of firefighters are needed to control
these fires and prevent them from doing
more damage than they already did what
you may not know is that somewhere
between 7 and 10 percent of the fire
in California are prisoners from the
prison system of the state of California
I began to look into this when I was
told of the difference in what they are
paid if you're a regular firefighter and
you're hired
you get paid from ten fifty per hour up
to forty one dollars and thirty four
cents an hour for your work which is
arduous and dangerous and so on if you
are a prisoner you get paid two dollars
a day plus one dollar per hour folks
that slave labor that's making use of
people who are not free and paying them
very little it's only possible because
the Thirteenth Amendment of the United
States Constitution which outlawed
slavery made an exception if you are
being punished for a crime and so here's
my appeal one what kind of
rehabilitation what kind of help are you
giving to a person who has the problem
of being convicted of a crime by
requiring them excuse me they can
volunteer as a prisoner the good idea to
do what your warden tells you to
volunteer for wouldn't it what are you
doing by imposing slavery on people and
my second question is why do the working
people who are not in jail permit this
those people being paid very little are
taking the jobs of people who could and
should be paid appropriately for such
difficult and dangerous and socially
important work this is not an acceptable
arrangement for either party and nor
should anyone say gee prisoners
sometimes really do volunteer I'm sure
they do and the way that's done is to
have the prison's so unpleasant the work
inside so difficult the rehabilitation
so minimal the punishment and the lonely
isolation so awful that it's actually
better to go out and fight for a fire
than to stay in jail that's not a
celebration of voluntary that's an
denunciation of conditions we've come to
the end of the first half of economic
update please stay with us after a short
break we'll be back for this
you
