Welcome friends to another edition of Economic Update a weekly program devoted
to the economic dimensions of our lives, jobs, debts, incomes, our own those looming
down the road, those of our kids 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
well to go over these economic changes all around us as we do that each week.
Let me jump right in by giving a shout out to the city of New York where this
program is produced. The city of New York has taken remarkable steps in this last
week or so and you should know about them New York City is the first in the
nation to do what I'm about to describe two things one it has gone into court to
sue the five major oil companies in the world for lying about climate change and
fossil fuels and damaging the city of New York by doing so and the second
thing they did was to declare in New York that they are going to divest the
city's pension funds by getting rid of selling five billion dollars worth of
the shares of those fossil fuel companies that they are also suing by
the way the New York City pension fund which has a hundred and eighty nine
billion dollars in it is invested in 190 fossil fuel companies whose shares they
are going to sell well let's first mention who the companies are so we all
know them BP or British Petroleum, Chevron, Conoco, Phillips,
Exxon, Mobil, and Royal Dutch Shell they are being sued for billions and what is
the point well nothing says it better than to read the statement of Mayor Bill
DeBlasio when he announced these steps taken by the city of New York
I quote New York City is standing up for future generations by becoming the first
major US city to divest our pension funds from fossil fuels at the same time
we're bringing the fight against climate change straight to the fossil fuel
companies that knew about its effects and intentionally misled the public to
protect their profits as climate change continues to worsen it's up to the
fossil fuel companies whose greed to put us in this position
to shoulder the cost of making New York safer and more resilient here's what
they plan to use the money for that they get from suing the oil companies for
damaging New York they want to repair all the facilities that have been
damaged by higher temperatures by higher levels of seawater by the storms like
sandy and others that were generated by the climate changes caused by fossil
fuel burning over all these years they want to make New York City resilient
they want to protect it from the consequences in the future of the damage
to the climate already done here is a city proactively moving to deal with
this problem not another conference not another report
not another well-meaning meeting of politicians to say they are concerned
and for heaven's sake not another meeting with these companies hearing
about how committed they are to doing something which the city of New York has
now shouted them out for not doing at all this is action taken by people at
the local level when the state and federal levels have let us down in this
area so badly my next update has to do with consumer debt in the United States
it has been rising very very fast since 2013 indeed to the degree that
there's been a so-called recovery in our economy and that's wildly exaggerated as
I try to point out nearly every week but to the degree that there's been some
recovery it has been highly dependent once again on debt on the rapidly rising
debt since 2013 which is about when this recovery is said to have gotten underway
which means that the well-being of the American economy to whatever degree it
has been reproduced has become again debt dependent it now the totaled
consumer debt exceeds its previous high in 2008 just when our economy crashed
let me say that to you again that total consumer debt just went over at the end
of 2017 just went over where it was when the economy crashed in 2018
now it is true that there is less outstanding credit per family now than
there was then even though the total of credit is larger we do have more
families than we did 10 years ago in this country but most of the reason that
the debt per family is lower is not because families haven't taken on too
much debt they have but it's because we wiped out the debt of the most indebted
they were declared bankrupt and got out of being counted in that way and so
they're not there and so the overall results look a little bit better because
we're not counting the worst of them but the bottom line is and this has been
documented particularly by the Federal Reserve Bank of New York that we now
have fast rising consumer debt it's rising most quickly for credit cards
secondly for auto loans, third for student loans, and finally for
mortgages, since Americans can't buy houses the way they once did, the mortgage
indebtedness isn't going up as fast as the other forms, but Americans are
relying on debt at a rising accelerating rate and given what that meant 10 years
ago it would be foolish not to understand that this is an important
economic reality now the third economic update takes us
back to Greece what is happening in Greece as always is important on this
program because it is an advance notice of what is happening elsewhere in Europe
what will be happening in those parts of Europe where it hasn't happened before
and likewise for the United States that's why we talk about your Greece so
what has happened to Greece now well once again there are massive
strikes and demonstrations across that little country you might be astonished
as I was to read, that since the crash of 2008, 2008
there have been count them no less than 50 general strikes in Greece the people
have been active in that country desperately trying to stop something
what wage cuts service cuts that is public services cuts in their pension
selling off state property to both domestic and foreign corporations and
auctioning off the property of those whose debts were so big that they'd had
to basically fold the tent and sell off everything that they owned the damage
done to the well-being of the Greek household and family is staggering it
exceeds anything that has happened elsewhere in Europe to date the latest
strikes are about the latest action and the latest action tells a big story the
latest action is a law like all these laws imposed on the
Greeks by the Europeans as a condition for getting the loans without we which
Greece could not continue as a society in other words they've made the Greeks
dependent on foreign loans and the foreign loans will not be given unless
the Greeks take the steps that the European Community the European Central
Bank the European Commission and so on the IMF impose on them the latest one is
to increase the number of people in a union that have to vote in favor of a
strike before you can have a legal strike okay it doesn't take genius to
understand that every single step imposed on the Greeks since the crash of
2008 have increased the power and wealth of the rich at the expense of the mass
of people increased the power of capital and diminished the power of labour every
single one what is going on here is a foretaste of what's to come
the Greek business community wasn't strong enough to get these things done
the mass of the Greek people organised in communist socialist parties and in
very powerful trade unions simply made it impossible for the Greek capitalists
to impose this kind of austerity on the Greek people it had to be done by
something more powerful than the Greek capitalist class and so it was the
entire European capitalist class organized into the IMF the European
Union and the European Central Bank together bailed Greece out of the crisis
with loans made Greece dependent on these loans because they did not have a
what a crisis inside Greece the mental change of the Greek economy
to try to rebuild it on a better footing no no no they didn't do any of that
instead they solved the problem by borrowing from the Europeans who lent to
them knowing full well that by making them dependent on European loans the
Europeans could dictate the conditions for doling out bits and pieces of these
loans and the conditions were to reorganize the Greek economy not to go
beyond the capitalism but to go backwards to a harsher and more unequal
capitalism far beyond what the Greek capitalists could ever have imposed on
the Greek people so now the Greek capitalists can sit there saying our
hands are tied it's those Europeans without whom we can
survive who are insisting that we do that and who's doing it in Greece is
just as important as what's being done the who is the syriza party the syriza
party is a left-wing party it prided itself on being more left-wing than the
old Greek Socialist Party had been before it and here's what that means
that the word socialist the meaning of socialist the meaning of left-wing is
being transformed in Greece it's no longer a political movement that stands
against capitalism it's no longer a political movement that is a criticism
of capitalism is an advocacy of a fundamentally different system the
Socialists have become the party that Institute's what the capitalist wants
that makes it happen when the old parties can't do the job anymore because
they've lost the support of the people income someone who says I can do a
different and better job cashing in on what socialism used to mean getting into
power and then turning out in the most cynical way you could imagine to be more
of the same old same old mamie maybe
even worse the reason this is important to understand is that it's a harbinger
of what is scheduled for the rest of Europe and North America as capitalism
shifts its ascendancy to Asia particularly to China and that makes
that the growing Society what it's leaving behind is the West and as the
West has to constrict itself the question is who gets constricted the 10%
at the top or everybody else and you know the answer before I tell you the
name of the game of those at the top is to make sure that the adjustment to a
declining Western capitalism is foisted off on the rest of the people
Greece is leading the way and that's why it's important to pay attention. Before I
go on with the remaining economic updates, let me remind you, as I often do,
we maintain two websites, and they are available for your use. They are
available without charge, and they're available 24 hours, seven days a week.
The first one is democracyatwork, that's all one word, democracyatwork.info
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if you would like to see the television version, because we do this
simultaneously radio and TV, is an easy way for you to look at the television
program anytime you want, you go to a website called patreon.com,
P-A-T-R-E-O-N, patreon.com/economicupdate, that's the name of the program
and you can see this program anytime you like in that way. So let me return then
to our updates the next update has to do with a british corporation
Carillion, i hope is the right spelling Carillion corporation. It's a 200 year
old company employs 43,000 workers that makes it a very big company out of those
43,000 20,000 little less than half are in the United Kingdom that company has
in fact collapsed it has been negotiating for bankruptcy compulsory
liquidation was announced on January 15th it may survive still there are
negotiations but there's some important lesson in this collapse of a huge
private construction company first the United Kingdom government had employed
Carillion on 450 projects including the construction and maintenance of
hospitals of schools of prisons of defense sites and of high-speed railways
the government uses tax money to make all these contracts with Carillion
corporation now the government has promised to pay the salaries of many of
these workers while they work out the financial collapse of this company all
kinds of other companies that provided services and inputs to Carillion are being
damaged by the collapse of this large corporation. Why am I telling you this?
The answer is for years we've been hearing that outsourcing activities that
the government used to do the government itself used to build or at least run
schools and prisons and defense sites and railways in England
these are outsourced we were told that turning these over to private
enterprises would give us a much more efficient production of these sorts of
things and is the logical thing to do everybody knows if we heard all this we
hear it in the United States just the same
well turns out it isn't so it turns out that one of the biggest beneficiaries of
outsourcing to the private sector what the British government does has been a
disaster this company has failed this company is leaving tens of thousands of
people without work thousands of companies without revenue it is a
disaster for all of England and listen now as I quote to you what to observers
of it all have to say the first is the Institute of Directors directors of
companies these are the people that are the kind of people that ran that
corporation it has issued quote a stinging rebuke to Carrillion's top
executives and directors. Wow! Roger Barker, head of corporate governance at
the Institute of Directors, was particularly alarmed that the company
changed its bonus rules to protect top bosses. Turns out that over the last year
as they were going down into collapse they gave themselves big bonuses these
directors oh goodness maybe nobody thought about what it might
mean if you outsource government activity to private enterprise that the
private enterprise are just as capable of taking care of themselves at public
expense as any politicians ever proved themselves
to be. Well if you didn't think about it, you can think about it now
and here's another comment Meg Hillier chairwoman of the parliamentary Public
Accounts Committee fears that taxpayers face quote a raw deal from this collapse
here's what she says trillions collapse raises grave
questions about jobs the delivery of public services and the way government
conducts its business we as a committee have previously warned of the risks when
contractors paid from the public purse become too big to fail they get a pass
they get too much money they mess up why am I telling you this
is it because I want you to believe that private isn't good and government is as
the way to do business and the answer is no that's not what I'm doing
liberals do that I'm no liberal I'm not here to tell you have the private do it
it's better than the public cuz that's silly but I'm equally aghast at people
who say no don't have the private do it have the public do it because putting a
bureaucracy of politics in charge is about as smart as putting a bureaucracy
that's private in charge which is what you do when you outsource it to big
private corporations. The solution to these problems is not to have vertical
controlled companies neither public nor private the solution to this kind of
failure and corruption is to have many people involved in deciding what happens
in a company not a few and that there are, also make sure that there are
people to sound the alarm when things aren't going well and to make sure that
as things go badly we haven't got a handful of people taking care of
themselves at the top while everybody else suffers and the problem gets worse
which is what happens either publicly or privately
let's not once again go from the public to the private followed by the private
to the public we've been back and forth this way for decades and it doesn't
solve the problem that's what the Carillion
collapse teaches us one more time my last update for today is a little different
but it raises so important a question that I wanted to leave the time to
develop it with you for a little bit it has to do with an action taken by the
CVS Pharmacy Corporation one of the largest drugstore chains in the United
States may indeed by now be the largest one I haven't kept track there's only
three or four and it's one of the largest ones for sure CVS was in the
news this last week by telling us something they are no longer they said
going to be touching up the photographs of women wearing beauty products on
their facial on their faces and so on turns out they touch these things up to
make these women look unnaturally flawless in terms of their skin and just
so with their eyebrows their hair you know you really do know what I'm talking
about they're not gonna do that they've had so much protest particularly from
women that they're not going to be touching up their advertising now let's
talk about touching up advertising why would you do that
in the first place why would you take a picture remember the pictures that are
taken are taken mostly of models models are unusually attractive beautiful
whatever words you want that's why they're chosen that's why they're models
so now you have an exceptionally beautiful model of something male-female
doesn't really matter why would you then touch it up why isn't it sufficient that
you found a beautiful example of whatever it is you're looking for here
comes the answer and if it offends you then you are offended by the way this
system works this advertising is not about celebrating beauty
and it surely is not about making beautiful more beautiful advertising
let's remind ourselves has a simple basic function to sell more stuff the
advertiser is a producer of something and that producer wants to sell more of
it and the way you do that is you advertise the product how do you get
beauty products to be sold more to be purchased for example by women or men
for that example here's how you do it you create an image of beauty that is
precisely beyond what a human being can produce flawless skin perfectly shaped
eyebrows unbelievably fluffy hair or whatever else it is you make it more by
touching it up in the picture then any human can achieve and then you make a
none-too-subtle appeal look you say to the individual buyer you fall short of
this you're not as beautiful as you could be and you should be but there's a
way to solve the problem we've just created for you by our product by this
beauty object product this cream this lotion this spray it will overcome how
bad we've made you feel by creating an image of beauty no human being ever
achieved this is a cruelty every woman who has reflected on growing up as a
young lady knows about anxieties about are you pretty enough are you beautiful
enough are you attractive enough men also increasingly go through this it's
important to understand you're not going through it because it's normal to
adolescence or puberty it isn't that's normal to capitalism a system that
systematically will use anything and everything in your psychology to play on
it to get you to buy more stuff if it means
suggesting you're not pretty enough or beautiful enough or good-looking enough
or thin enough or whatever it is that's will be done you'll be made to feel bad
about some dimension of yourself so that you will buy whatever that seller is
selling capitalism needs to make money by selling and advertising is its way
and the social consequences have always been awful yes it's nice that CVS is
going to be doing less touch-up on its beauty products but that's a tiny
fraction of what the problem of advertising has been and continues to be
we need to understand that if we're ever going to get out of a society that puts
that kind of cruelty out there as a matter of course every day we've come to
the end of the first half of economic update thank you so much for being part
of it please stay with us after a short interlude we will be right back
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