[music]
Welcome, friends, to another edition of Economic
Update, a weekly program that you're quite
familiar with by now, and you're also familiar
with me.
I'm your host, Richard Wolff.
I want to talk today in the beginning of our
program about two parallel economic developments,
one in the United Kingdom, Britain, and the
other one here, in the United States, because
they really are quite similar, which is probably
not surprising considering they were all both
once part of the same British Empire, now
long gone
Let's start with the United Kingdom.
They suffered the great, global, capitalist
crash in 2008 as badly as any country did.
A little bit differently, they followed it
with a very harsh austerity.
They had bailed out the big banks and corporations.
They had borrowed huge amounts of money.
The government had to bail them out, and then
immediately having bailed out the companies
that actually brought them the crash, they
turned to the mass of the British people and
said, Well, we borrowed so much money.
We have to pay it back.
We can't afford the services we provide to
you.
And they cut back the services, and they laid
off employees.
Wages declined in Britain more severely than
they did elsewhere in the last ten years since
the crash.
It got so bad for the British people, they
did something extraordinary; namely, they
decided that the fault was not the capitalism
that failed to work for them, but rather the
fact that Britain was part of Europe.
So they had the Brexit vote, where they voted
to divorce themselves from Europe.
That genius idea was the Conservative Party
doing its part to focus people not on the
capitalist system that was screwing them,
but on the Europeans who weren't.
And so they are now separating from Europe,
which is causing them even more economic problems.
All of this is managed by a ruling Conservative
Party led by Mr. Cameron, at first who caused
the Brexit vote, then fumbled and bumbled
by Teresa May and now in the hands of Britain's
own Trump, Mr. Boris Johnson, who is threatening
to take Britain out in October, and God knows
what will happen.
This is a sad story.
It is a story of capitalism's decline in England
and the inability of the people who lead it
to face that reality and try to cope with
it, but instead to engage in a real program
of denial, blaming immigrants—how popular
these days—and Europeans.
How nice to blame foreigners.
Notice immigrants and foreigners are the problem,
and you rail against them, and you leave them,
and you expel them, and you imagine that this
is gonna solve the problem of a declining
capitalism.
The tragedy of it is that the decline is only
getting worse, and the British people, deep
in their souls know it, and they're gonna
have to make big changes or they're gonna
go down with it.
Now let's shift to the United States, and
you're going to see, if you haven't already,
that the story is quite similar.
I'll focus on Mr. Trump and the Federal Reserve.
Here's the problem in the United States: We
have a capitalist system, and everywhere that
capitalism has existed as an economic system
in a society, the same truth has shown itself
over and over again.
Every four to seven years, this capitalism
has an economic meltdown.
It's called a recession, a depression, a downturn,
a meltdown—the words are endless because
the repetition is endless.
And we're now about nine years from the last
one, 2009 and [20]10, which means the averages
are catching up to us, and we're gonna revert
to another recession.
Everybody in the financial world knows that
and knows that it's only a question of when,
no longer a question of whether, and now here
comes the problem for Mr. Trump, which is
parallel to the problem for the Conservatives
in the UK who are Mr. Trump's parallel.
Here's the problem: Mr. Trump is running for
re-election (just as he has been doing since
the day he was first elected) and having to
say that the economy is great.
Well, it isn't because it's a capitalist economy
about to have a nasty recession, and usually
when you have had a recession postponed, the
postponement makes it worse—you know, like
having an illness that you don't attend to
gets worse if you don't attend to it.
Well, capitalism has a lot of parallels with
illnesses.
So Mr. Trump goes around saying it's wonderful,
but the reality is (as his economic advisors
know) that a recession is coming.
This scares Mr. Trump.
It threatens his reelection because if that
downturn we all know is coming because of
capitalism; if that downturn hits in 2019
or even if it hits in the first part of 2020,
it's going to hurt millions of Americans (they
always do, these downturns), and those people
are not gonna be happy with Mr. Trump.
And whoever runs against him will say, Hey,
Mr. Trump, it's the economy, stupid! (like
earlier candidates have done in the same situation).
So what is Mr. Trump doing?
Well, he's trying to blame the economic troubles
on somebody else, and he's a specialist (just
like Mr. Johnson is in England).
He blames (you guessed it!) immigrants, why
not?
And foreigners, why not?
The Chinese, you see, have been cheating us,
and the Mexicans and the Canadians and the
Europeans—gee! the whole world has been
just taking it out on the good old victim
United States.
It's a picture no other part of the world
recognizes, but it sells in the US, or at
least Mr. Trump hopes so.
So he's gonna blame them, but that's not enough
because this is a doozy that's coming.
So he's decided to blame the Federal Reserve.
You see, they should cut interest rates.
By yelling about the Federal Reserve, he's
already showing where the blame he hopes will
go for the economic troubles—not to him,
not to his policy, not to his carrying out
what capitalism wants while blaming immigrants
and foreigners—no, no!
He can now also blame the Federal Reserve.
It didn't cut interest rates.
And the second reason he wants that to happen
is if you cut interest rates, you make it
cheaper for people to borrow.
Maybe he hopes he crosses his fingers, or
whatever it is that he crosses, and he hopes
that maybe with lower interest rates, people
will borrow more, businesses will borrow more,
and maybe the economy, the downturn, will
be delayed a few months, just long enough
to get him to slide back into office in November
of 2020.
That's what's going on.
Capitalism is, in fact, in trouble in the
United States, as the extreme inequality makes
evident every day, as the turmoil—everything
from opioid crisis to mass shootings gives
you ample evidence.
What is being done?
Well, in the US, as in the UK, next to nothing.
Instead, we engage in denial, blaming scapegoats,
wherever we can find them: immigrants, foreign
trading partners, the Federal Reserve, anything
but the system.
Because Mr. Trump, like Mr. Johnson, are loyal
servants of the status quo.
Don't blame the system; don't change the system;
that's the iron rule governing them.
You can say whatever you want, as long as
you protect what puts you in office and what
keeps you in office.
That's the harsh reality, but the irony of
it all is that the capitalism they're protecting
keeps deteriorating because they're not facing
what the problems are and what the changes
needed to fix it are all about, and that can
only go so far.
Stories of decline, of societies, coupled
with blindness on the part of the people who
lead those societies, that always ends badly.
And here's the irony that history should have
shown to both the UK and the US.
They were both parts of something once called
the great British Empire, upon which it was
said the sun never sets because it's everywhere.)
Well, guess what?
The people who led it lost it.
It's gone, never to return because they didn't
face the realities of what it meant, and that
sad story is being recapitulated right now
in these two countries who pretend, and hope
everybody else does, that what I just described
is not going on and that will end badly too.
We've come to the end of the first part of
this program.
Please stay with us.
I think you'll find the second part interesting
and valuable as well.
[music]
Welcome back, friends, to the second half
of today's Economic Update.
Before jumping in to the two big topics I
want to talk to you about today, one of which
is the political economy of immigration and
the other one is what's going on in Latin
America, with particular reference to Venezuela.
Before doing that, I want to remind you that
it is a very important support for us to have
YouTube subscribers.
If you have not yet subscribed to our YouTube
channel, Democracy at Work, please do so.
It helps us enormously, and it's a simple
click for you to do.
And secondly, I want to invite you to make
use of our websites, Democracy at Work (all
one word: democracyatwork.info) and our RDWolff.com.
There you can communicate with us, sign up
to follow us on Facebook, Twitter, and Instagram.
And, finally, as always, a strong thank you
to the support of our Patreon audience.
We value your support and your interest.
It is an important encouragement for all that
we do.
So let me begin with the economics of immigration,
a topic that seems to be lost in all of the
hoopla around the Trump administration's behavior
at our border.
Immigration happens by and large because employers
want it.
They often are recruiting directly and indirectly
around the world to bring workers here.
Why?
The basic reason is it's profitable, which
is why companies do most of the things they
do in a capitalist system.
So they bring immigrants—sometimes educated
immigrants, sometimes not so well-educated
immigrants—because they're cheaper to employ
than their native American counterparts.
And now let's watch how this plays out.
First, the Democrats.
The Democrats reward, support the employers
in bringing in cheap immigrants by reading
to them the imprint on the Statue of Liberty
about how we, as a nation, welcomed the poor,
the tired, the hungry masses huddled around
the world who want to come here.
And that's how the Democrats help the employers
get the cheaper labor.
The Republican Party supports the capitalist
employer in a different way.
It works real hard to turn the native workers,
watching the cheaper immigrants come in, turns
the native worker against them, sees the problem
as the poor immigrant rather than the employer
profiting off bringing that immigrant here.
If the native upset and anger at the immigrant
community moving into the school, moving into
the neighborhood, moving into the jobs, bringing
a different language and culture—if that
boils over, then the two parties play a different
role.
The Democrats wave their scolding finger first
at the native Americans for being hostile
to the immigrant, and secondly, to the GOP,
the Republicans, for a kind of racist support
of all of this.
The Republicans answer in again helping the
employer by saying all the Democrats only
really support immigrants because they want
their votes.
While all this bickering between Republicans
and Democrats goes on, the employers are laughing
all the way to the bank.
They are getting the extra profits from the
immigrants.
They are crowding them into housing for which
they overcharge the rentals.
You get the picture.
And if it all begins to boil over to the point
where someone like Trump comes in and builds
an entire career around this kind of stuff
(battling and yelling and accusing and blaming)!
If this actually works to stop immigration,
what will the employers do?
They’ll do what they have always done when
they run out of cheap immigrants.
Some of them will move to where the immigrants
came from, to hire them there and pay them
the low wages over there, so that Americans
will be wondering where the jobs went.
And if that isn't feasible, then the employer
will replace native workers (who are expensive)
with machines and automate.
The system is the problem.
That's the problem, that's what has to be
faced.
It isn't this or that detail.
The immigrants are here because it pleased
capitalism to bring them.
It's profitable, and if the noise and trouble
that ensues makes it unprofitable or difficult,
then we will solve the problem, say the capitalists,
another way.
We’ll move the jobs over there or we’ll
automate the job right out of existence.
If you don't want to be on the wrong end of
this problem and this process, capitalism
is your difficulty, not poor immigrants.
It makes as much sense beating them up as
if you ran into the factory and beat up the
machine that replaced you.
“Grow up” is the answer we need in the
face of a system that is designed for profit
and not for the needs of people.
This is an old story, and if you ask me (which
you are entitled to do), what should we do
about immigration?
Here's a simple, two-part answer.
Number one, every person who wants a job in
the United States ought to be given the right
to have one.
A decent economic system finds out how to
match the individual interests and passions
and skills and enjoyments of individuals with
what is needed in society.
People are happy if they make a contribution
to society, and society is better off if it
can find and harness the creativity that varies
from one individual to another.
Either you do that well and you succeed as
a society, or you don't.
Currently, we don't.
And if you did that, if everybody had a job,
then you could have a proper democratic decision.
There are people who would like to join us
to bring us the benefits of different cultures,
different cuisines, different dresses.
There are also people who need a better life,
just as our own forefathers and foremothers
did.
And let's have a democratic decision whether
we can find a place in our economy, as in
our hearts, for people who need help.
Many of us are devotees of religions that
tell us that's what God wants us to do.
It's remarkable how few of us seem to be listening.
Let me turn now to the second major topic
for today's conversation.
It has to do with Venezuela, but really, the
problem of Venezuela has to be put into a
context.
Venezuela is one of 20 countries in Latin
America, Central America, South America, whatever
you want to call it.
Those countries have been part of the world
for a long time.
That means for the last two three hundred
years, they've been part of a global capitalist
system.
They were never colonies, a few of them were,
but most of them were not colonies.
They had their independence once they broke
away from Spain and Portugal, which were the
major European countries that did try to colonize
them and did colonize them early on, but they
became independent countries.
Their economies were capitalist; they were
private enterprises by and large.
They had markets as the institutions through
which people bought and sold their ability
to work and there buy the products that their
work helped to produce, etc.
Free enterprises, private enterprises, markets:
the accoutrements of capitalism.
The basic relationship in their production
systems was the relationship of employer to
employee.
The employers were a small minority; the employees
were a vast majority.
And this was the way the economy was organized,
which is why it deserves the name capitalist
for the last two or three hundred years.
There have been very few exceptions.
The only exceptions right now that deserve
the name are Cuba and Venezuela.
What can we say about capitalism and South
America?
Well, the answer is very obvious.
In every country, there is a small minority
of very rich people, and I'm talking Mexico
to Chile and everything in between.
A small minority of very rich people and a
vast majority of extraordinarily poor people.
If you go to a major city in Brazil, South
America's largest country, you will be taken,
if you dare—I've done this in Sao Paulo—you'll
be taken, if you dare, by a host, if the host
dares, to the edges of this city where the
vast majority of the city's residents live.
Those areas in Brazil are called favelas.
They are some of the worst slums on this planet.
Every major city in Latin America, in South
America, has huge populations of desperately
poor people, people who don't really have
homes or houses.
They live in shacks of corrugated metal and
cardboard, where there's no real sewage and
no real running water, except on a few occasions
when they all have to compete.
The conditions are abominable, and they have
been that way for the last two centuries.
Capitalism develops unevenly, and one of the
most glaring unevennesses are all over Latin
America: Chile, Peru, Ecuador, Mexico, Honduras—it
never stops.
Well, what do you say about this?
Well, occasionally, in every one of these
countries, a revolution breaks out, which
should surprise no one because these conditions
for the masses of people are horrific, not
just in Cuba and Venezuela.
In 1954, the people of Guatemala had a revolution.
They wanted to
take over the land and distribute it equally
to undo the grotesque inequality that capitalism
has reproduced for two centuries.
But the United States got rid of the leader
Jacobo Árbenz, and he disappeared.
And I could give the story about virtually
every other country.
The United States has looked upon South America
as its special area.
We call that the Monroe Doctrine from back
in the early 19th century when President Monroe
declared that this was our area and the Europeans
were to keep out.
It was as if one big colony for the United
States, which is how the United States has
dealt with those parts of the world for pretty
much the rest of the period until now.
So yes, in 1959, Cuba's turn.
It had a revolution, and the interesting thing
was for the first time the revolution was
threatened by the United States—indeed,
like always, the attempt was made to overthrow
the Cuban Revolution.
Yeah, yeah.
It was 1961.
Bay of Pigs.
Look it up if you're not familiar with the
history.
But the new young leader in Cuba, a man named
Fidel Castro, unlike the Jacobo Árbenz in
Guatemala few years earlier, managed to survive,
and his government managed to survive to the
present day.
In Venezuela, Hugo Chávez, and now his successor,
Maduro, are trying; they're trying to overcome,
to stop the horrific legacy of what capitalism
has meant in Venezuela, a resource-rich country,
oil, that has nonetheless the same pattern
of a minority of very rich people, a majority
of very poor people, and a small middle class
in between, usually one dependent on employment
from the very rich at the top.
People have been critical both of Cuba and
of Hugo Chávez, whom the United States, by
the way, also tried to overthrow at the beginning,
a botched effort that was the laughingstock
of the world, if you know the story.
But here's the interesting point: Are there
things that Cuba and Venezuela do that are
worthy of criticism?
Of course.
Have they done things that we wouldn't want
them to do, that a decent society shouldn't
do?
You betcha!
They are not perfect.
They are not the solution to the human problem,
and they make mistakes—sometimes big ones—and
they make people suffer.
All true, all true.
But you are no way going to undo two to three
centuries of capitalist inequality deeply
engrained in the consciousness of your people
by making a social change that has no blemishes,
has no failures, has no cruelties.
That's not gonna happen.
We might wish it, and I certainly do, and
we might say it's important to point out the
mistakes that the Cubans and the Venezuelans
have made and are making.
Fair enough.
But once you understand the context, you will
understand that the big problem facing Latin
America is not Cuba and not Venezuela, neither
of their regimes.
They don't even have the history to justify
it.
The history is on the side of saying the big
problem of the economic backwardness, inequality,
and instability of Latin America.
There the credit belongs where the credit
is due.
It's the capitalist system that has produced
and reproduced their poverty, their misery,
their inequality.
If that isn't dealt with, you are going to
have one revolution after another, as we have
already seen.
The future will be as the past has been, and
will the United States each time be entering
and trying to stop and control what in the
end will win?
The demand of people for an economic system
that does not perform in the future as it
has in the past.
The overwhelming majority of people of in
Latin America want out of a system that has
brought them the kind of suffering, the kind
of inequality that is in fact behind the migration
of people north to the United States because
the conditions where they are, are unbearable.
That, too, is a product of a capitalist system
brought to Latin America and South America
by Europeans, left there, managed now by their
own elites, their wealthy elites.
This is not a sustainable situation, and finding
fault with Cuba and Venezuela for how they
have managed to get out of this situation
is an inappropriate cheap shot that doesn't
belong if you understand the economics of
that part of the world.
I hope you have found these discussions, first
of immigration and then of South America,
up-to-date, topical, and a useful corrective
to what is so often said in the mainstream
media about these urgent problems that need
our attention.
Thank you, and I look forward to speaking
with you again next week.
[Music]
