Welcome friends to another edition of
Economic Update a weekly program devoted
to the economic dimensions of our lives
jobs incomes debts ours those of our
children those looming down the road
I'm your host Richard Wolff I've been a
professor of economics all my adult life
and I hope that that has prepared me to
offer these analyses of what's going on
in the economy all around us and the
economy we all depend on before jumping
in to quick announcements we've changed
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all the ways to proceed if that is
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we can be of some help. Well I want to
dedicate our program at least our first
half today to the notion that there are
a lot of ways that a capitalist economic
system keeps itself going and one of the
most important is to tell stories to
make the flaws the failures of that
system either disappear or look very
different from the way they actually are
and we're gonna do a number of examples
of that situation let me begin with
something called the labor force
participation rate it's a number that
governments around the world keep and
it's simple it measures the percentage
of people of working age who are
actually in the labor force while either
working or looking for work it's a rough
measure of how many people in your
society are workers of one kind or
another and are actively playing that
and here's an interesting result that
was recently reported by the OECD and
indeed you can find a good story by
Martin wolf no relation in the financial
times of July 17th it turns out that the
United States ranks very low in fact
there's only two countries of the major
economies looked at Italy in South Korea
that ranked lower than the United States
most of European countries ranked much
higher and what does that mean it means
that in European countries Sweden France
Germany England you know the percentage
of working-age people who are actually
working is significantly higher than in
the United States and why is that
important well the answer is very
important in itself in Europe the
government provides enormous ly larger
quantities and qualities of public goods
to people they subsidize education they
subsidize housing they have a national
health service every one of these
countries that is far more comprehensive
and generous than anything that exists
in the United States in other words the
welfare system the social welfare system
the general supports people get from
their government is much higher and by
the way correspondingly so are their
taxes and here in the United States the
argument is heard from conservatives all
the time
and by conservatives I mean both
Republicans and Democrats the argument
is heard you can't provide people with
all these services because you know what
then you take away their incentive to
work it's part of the idea that the
country can be divided into those who
work hard and those who are just takers
well the statistics prove otherwise in
Europe where they give people much more
in the way of public support and tax
them more it turns out that the higher
taxes and the higher supports don't make
people work less that's been a lie
that's been a misinformation
out by conservatives for a long time it
turns out that Europe shows us that you
if you give your people more supports
they work more not less so what is the
reason that story is told in the United
States it's a cover it allows the rich
to gather more and more into their hands
and to justify taking away public
services from the mass of people on the
spurious and untrue argument that if you
do that they become dependent and don't
work anymore
it's not true never was and now we have
the statistics to show it
here's a small example of a capitalist
system making up things in order to fool
people in New York State there is a
tough race in the Democratic Party
between the sitting governor andrew
Cuomo and a very important challenge to
her from Cynthia Nixon an actress from
the Sex in the City television program
that many of you know now Cynthia Nixon
is like Bernie Sanders and folks like
that that are challenging the old core
of the Democratic Party of which mr.
Cuomo is a charter member in this
struggle I could not get over learning
that close associates of mr. Cuomo have
been recorded as giving many many $1
contributions to the campaign of Mr.
Cuomo I wondered to myself why would
they do that why would one person give
many $1 contributions rather than the
usual rich person's contribution of
10,000 or whatever and the answer is
nowadays it's bad for wealthy corporate
rich people to be exposed for what they
are so by having his associates and
friends give $1 contributions he can
claim that the average contribution is
low and thereby suggests he's somebody
sorted by average people who can only
give one or two or three dollars it's an
external example of how you manipulate
when the system itself can't be revealed
for what it is which is that most
politicians get most of their money from
a tiny core of big corporations and
wealthy individuals and now here's
another example of the system kind of
hiding from us how it works
here the statistic is an alarming one in
ways I think you know because we've
talked about it on this program too that
malls across America are dying and that
one of the reasons publicly given for
why this is happening is that Americans
are turning to online ordering and
getting this stuff delivered rather than
driving to the mall to buy it there
well behind that is another truth that
doesn't get much exposure
the fact is it's cheaper and Americans
don't have the money and if they have to
choose between driving to the mall with
a car that's expensive using gas that's
expensive to pay prices that are higher
than what you can get if you find it on
the Internet well in a pinched economy
which is what ours is you don't go to
the mall the way you did why am I
telling you this because today this
story is also the same story it turns
out that we're not going to restaurants
the way we used to
Americans are ordering their food
delivered to them more and more than
they ever have before which is
threatening the restaurants of this
country because they can't really do
what they were set up to do they can
either survive by becoming delivery
services or there will be outmaneuvered
by delivery service food enterprises and
what's driving that two things one again
the inability of Americans to afford
going to a sit-down restaurant delivery
food is cheaper just like ordering
instead of going to the
is cheaper it's a pinched economy the
reality of a capitalism that isn't
working really well shows up in shifting
to distributed delivered food but
there's a second reason angry workers
have been successful in pushing up the
wages that were terribly low of food
service workers waiters waitresses the
folks that work in restaurants so you're
pinching the profits of those companies
from below by having to pay decent wages
and you're pinching those companies by
having a population that doesn't have
enough to go to a restaurant solution
deliver the food and you know what that
means friends it's another contraction
of the range of enjoyments you can have
in a system that can't provide them to
you so you're gonna stay at home and put
the food on a paper plate and have that
not gonna have the restaurant experience
anymore because that's the way
capitalism works it's right up there
with statistics showing that our cars
are getting smaller the square footage
in our apartments is getting less the
working class of this capitalist system
is being reduced declined undone and the
restaurant story is just a part of it
two more examples housing California is
facing a housing crisis what is it rents
are too high people can't afford a rent
the unemployment problems are now
compounded by a homeless problem people
who can't afford the rents that are
going crazy and why because of a
capitalist housing market what do I mean
well I mean a housing market that is
governed by the market you know what
that means the market runs the housing
system it means that houses are
distributed homes apartments the way a
market distributes everything it goes to
the person with the most money if you
and I both want the one ice cream cone
that's left we bid against each other
that's how markets work I offer a bit
more
well then you counter and you offer more
and I keep doing that and you keep doing
that until we reach a point where one of
us can't afford it anymore and the ice
cream cone goes to the person with the
most money housing is exactly the same
when it's run by the market housing goes
to those with the money and those who
don't have enough money may they have
more children
sure do they have a greater need because
of their social situation perhaps is it
unethical to give them stuff that scares
only to those with the most money most
systems of ethics and morality would say
so but a market doesn't care you got the
money you get it you don't have the
money you don't get it it's a method of
distribution that you ought to think
about and in California and in other
parts of the country it's producing a
serious homelessness problem as people
are forced out of the canoe
neighborhoods they need they were born
into where their children are going to
school and have their friends lots of
things a community could be that are not
available to it because the market is
shrinking the property away from those
who can't afford it and giving it to
those who can spend the money that's
what a market system of housing is and
here's the last myth to explode a way in
which capitalism behaves that it has to
hide a recent study done by the Federal
Reserve Bank of St. Louis published in
2017 and a update here in 2018 that will
soon be published in the American
Journal of economics and sociology looks
at the wealth gap between white and
black Americans and it comes up with an
interesting result that gap has grown
worse across the Obama administration
and it continues to get worse across the
Trump administration and that's
interesting because of a particular
other statistic that goes along with it
that black Americans are closing the gap
between the level of
education they achieve and that achieved
by whites in short black Americans are
rising in the level of education they
are able to get relative to whites but
it is not helping them reduce the gap in
wealth and income between black and
white and why is that important because
one of the myths the make believes of a
capitalist system is that it isn't the
problem of capitalism that keeps black
and whites so different in their
economic well-being it it's a problem
that could be solved by education
education will solve the problem no it
won't it hasn't you know why because
whatever the benefits of Education
they're not strong enough to overcome
the divisions that capitalism creates
between people so black people get more
education but they have to go into debt
more to do it because of the wealth
distribution capitalism produces
divisions and in justices and neither
education nor anything else covers it
over well that does it for the first
half of the show we will be right back
welcome back to today's second half of
economic update before I turn to our
guest dr. Harriet fraud who is with us
at the beginning of every month I wanted
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appreciate it well our guest today is
dr. Harriet fraud again as she is with
us at the beginning of every month she
is a mental health counselor in private
practice in New York City
she writes extensively on the
intersection of economics psychology
personal and intimate life she publishes
widely in a number of books and articles
that we have available through website
where you can find her she also has her
own website
Harriet Fraad F-R-A-A-D harrietfraad.com
Thank you very much again for
joining us today thank you for inviting
me welcome
today our topic is fertility sort of the
if I understand correctly the rate at
which our population does or does not
grow and one of the reasons we're
talking today is because you really
surprised me by letting me know that the
fertility rate the rate at which our
population is going is lower now than it
has been in many many decades yes and
that one of the lowest points in the
history of our country and I think that
this is a vitally important matter
because how the population does it
doesn't grow is a crucial shaper and how
many workers they'll be what kind of
economy will have what the quality of
life for people will be if they're
growing as opposed to not so could you
begin by telling us whether I've got
that right about fertility and and what
is at the base of why this is happening
well first I want to mention that it's
very important for the reason that it's
been written about and demographers are
upset about it is because the way things
are structured is that the wage workers
of today are helping to support Social
Security of tomorrow and if there aren't
as many wage earners and Social Security
has increased as the population ages you
have the potential for all people being
pitted against young people and vice
versa
of course the
is not necessarily you could get the
money from taxing the wealthy or their
loopholes and hideaways for their money
which are legal or corporations or
reducing the military budget but as
things go it is potentially Pope the way
it's used it could polarize the youth
against older people you know it may
help everyone to understand that our
Social Security system is a kind of
pay-as-you-go system not all systems are
the same so yes young people in their
working years put money into Social
Security and then the government holds
that builds it up by investing it
basically in government bonds and so on
so that when you retire at 65 six seven
or eight in a sense the money you've put
aside the government has taken from your
check and put aside for you is then paid
out to you and so the available funds to
take care of the old depend on the money
coming in from the young people because
we hope it all kind of balances out if
there's a decline in fertility it won't
balance out because the money coming in
from the young may not take care of
what's being done and the question is
how do you respond to that so that's
just one way in which this is very
important is very important well let me
ask you the hard question why why why is
this happening why is the rate of growth
of our population low shrinking lower
than it's been for a long time there are
a lot of reasons the most important I
think is precarity in order to have a
child you have to trust in the future
you're creating a future person will be
a worker and a producer in your society
you have to feel since children are
helpless and can help you we are the
most dependent animals for the longest
time you have to have some financial and
emotional security Americans have none
anymore in terms of financial security
people are in very precarious condition
60% of
Americans don't have $1,000 in the most dire
emergency and by that I mean they get in
a traffic accident they're arrested and
they'll go to jail and ruin their life
because they can't find the $1,000 bail
or to get a lawyer and if they break
some teeth they'll be in horrible pain
rather than get their teeth fixed they
don't have that money
people are very desperate economically
translates then into a decision either
to postpone or not postpone forever or
not or postpone temporarily and 82
percent in the workplace hasn't had any
raises I mean people are employed but at
lower wages and so that they can't
afford to sock money away and feel
secure enough on a economic level
emotionally that's matched by precarity
they used to be that if you were white
and male you could get a family wage
support a family you'd have security on
your job no you don't and so you don't
have a secure job and marriage is much
less frequent than it used to be because
people don't have the wherewithal to
settle down in a household fifty percent
of those people who actually do get
legally married get divorced or legally
separated and another 15 or 20 percent
just split because they don't have
assets to fight over so you have a
massive desertion marriage has become a
luxury good for those people who can
afford because they afford it because
they're skilled enough educated enough
or personally rich enough that if they
lose a job they'll get another one so
tell us or live I mean I want to pick up
on this who is having children and who
isn't I understand the overall rate is
very low and shrinking that's right but
within the overall average that's
falling I assume there are some people
that are having children and others that
are not tell us a little bit about how
this breaks down that's right there are
some that are having others that are not
not group way out ways the having group
the people who are having children are
first-generation immigrants who are
having fewer than they used to but they
are having children until they learn how
expensive and difficult it is and then
the second generation catches on and
doesn't have children so it's fair to
say they bring in a sense the child
focused lives they led before they got
here
and it takes them a generation or so
right they think that their children
will be an asset that they will help
them these days more and more old people
have no help at all
their children are dispersed or so
overworked that they can't afford to
help the old people there's a reality
that this doesn't work there's a
footnote here that it seems to me
important if one of the few groups in
the country that is having children our
first-generation immigrants then the
Trump administration's and indeed the
Obama administration did this to
expelling immigrants Obama did it Trump
is doing it more that's actually gonna
worsen this fertility problem absolutely
because it's removing a population that
was producing young children that would
grow up and work and put into the Social
Security system and so on and so on and
a group of hard-working people as well
immigrants so you you are just like with
a lot of other decisions in the
administration and previous ones they're
not thinking of the ramifications of
their decisions what might happen
they're just catering to their base
which is a rather base base to which to
cater so the other group that's having
children are the top tier of our economy
the ten top ten percent especially the
top 1% and they are able to have
children because they can afford nannies
paid vacations meals out take out food
dog walkers massagers fitness trainers
party planners for their kids in their
own party
caterers and all the other servants who
perform services for the top they can
buy those services and therefore they
can afford to have children the top 1%
is having numerous children they're the
only group who isn't having children is
the vast middle and lower middle
although more poor people are having
children than used to not at all enough
to balance it because they've closed
Planned Parenthood the only affordable
reproductive care they've closed
abortion clinics in 89 counties you
can't get an abortion in the United
States and therefore people at the
bottom can afford the birth control or
the abortion they needed not to have
children and those are often the most
resented and deprived children however
the even they are not having as many
children so you have in a sense the
extremes mostly it's the extremes poor
and rich that are having the children
and the vast in-between that are not and
the fundamental reason is the precarity
of everybody's financial and emotional
situations in terms of planning life
what are some of the consequences that
you would kind of focus us on that we
can expect to flow from this reduced
well I'd like to go back a little bit
and say that there's a combination of
things because marriage is breaking down
in many Western industrialized societies
but they don't have the same level of
quick shift to a lower population and
quick shift to a lower fertility rate
because they support parents the biggest
reason people give in the there's a big
study by The New York Times of thousands
of people and the reasons they give for
not having children the biggest one is
the unaffordability of child care child
care is free or heavily subsidized
throughout Western Europe it's not
in the United States and the lack of
benefit we are one of five countries in
the world that doesn't have paid
maternity leave
we're in the company of Lesotho
Swaziland Papua New Guinea and Somalia
and the United States where the fifth
and we don't have paid vacations we
don't have paid family leave
we don't have paid maternity care or
health care these are you mean as
matters of laws the way everyone else in
the Western Europe has access to these
things depends on whether your employer
does it or not and most employers don't
don't
child care here is prohibitive the
average cost of child care is eleven
thousand six hundred and sixty six
dollars a year in big cities like Boston
New York San Francisco it's up to twenty
thousand in places like Mississippi
which are much poorer it can be around
four thousand so that what you're
talking about is the average salary
actually the median real wage in the
United States is $31,000 in something if
you take more than ten thousand dollars
off of that what do you have to live on
for the whole rest of your life and so
that you really people can't afford
childcare people are going to horrible
extremes for themselves and their
children leaving children in kennels
leaving children and at home a long way
they could get arrested for it but they
can't afford it well you know I mean
we've come as often we do the key moment
we're running out of time for this part
of the show but I do want to remind
folks of something I remember from a Bob
Dylan song me too
that you've hurled the worst curse that
you could ever hurl the fear to bring
children into the world what kind of a
society produces conditions and doesn't
face them that have this result thank
you very much dr. fraud for those of you
that have been with us I hope you have
found this as interesting as I have and
of course let me remind
everyone that this conversation will be
continued on our patreon.com slash
economic update website as well I look
forward to speaking with you again next
week
