welcome friends to another edition of economic update weekly program devoted
to the economic dimensions of our lives incomes debts jobs for ourselves for us
in the future for our children I'm your host Richard Wolff I've been a
professor of economics all my adult life and my hope is that that prepared me
well to present to you each week this analysis of some of the major events in
the economic lives we lead I want to begin this program by thanking various
hosts that I have visited during the month of February 2018 I want to start
with the Chapo Trap House they did a really wonderful interview that was
lively and interesting and for those of you who know the important work that
they do chapo traphouse take a look you might
find the interview they did with us as exciting and interesting as we found it
I also want to thank the people in praxis peace a local group in Sonoma
California on the other side of the country and they were our hosts when we
spoke dr. Harriet fraud who often appears on this program and myself at
the Sonoma Community Center and finally I want to thank KPFA the Pacifica
station in the bay area of California where I returned in order to do the
annual fundraiser at the First Congregational Church in Berkeley as I
have done every year for the last quite a few it's a wonderful experience for me
to meet the very people that I try to reach the people who hear me on the
radio and then want to kind of have a in-person and close-up interaction just
want to let you know it's as interesting and exciting to me as it is I hope to
all of you so let's jump into the economic updates
for our time you must have noticed as I have that every time the capitalist
political economy that we live in an enterprise driven economic system of
stores factories and offices on the one hand and the government which is
dependent on those enterprises from much of its revenue and for the economy to
keep going without which there wouldn't be much toleration for the political
system either and you must have noticed as I have that when that economic system
breaks down the place where almost everyone turns real quickly to solve the
problem is to the government that's what happened in the 1930s when we took a
real dive it's what happened again in the bailouts that came right after the
crash of 2008 so isn't it interesting that the very corporate leaders who turn
to the government to save them when their system doesn't work turn around
and blame the government as if it were the source of all the problems rather
than then of course it's very clever right because if we are all afflicted by
unemployment and all the difficulties of a capitalist system it would be
dangerous for the people who actually run it if they were the targets of our
upset so it's important to have a scapegoat to make somebody else do it
and the government has been the scapegoat of choice for right-wingers
and for people who love capitalism and cannot get their heads around the idea
that it's a system with a lot of problems nothing illustrates this more
than the fishing industry that's right something we don't talk about very often
but we need to fishing is a dying industry not long ago we out fished
fresh water but now we have done what a few years ago would have been thought
impossible we have literally destroyed ocean
fishing as well we've over fished we fished in unsustainable ways
why because fishing companies here we go now have profit as the bottom line
fishing companies are competing with one another all the time it makes no sense
for one fishing company to hold back on grabbing all the fish it can because if
it does it only creates the business for a competitor so in that kind of a
situation if you let the private enterprise system go it will do what it
has now done fished out the oceans made fish difficult made fish orphan scarce
made fish too expensive that excuse me for many people to afford and to
literally make them disappear sorry folks what we have is a failure to use
the government to control the failure of the private fishing industry it's a
cautionary tale about how capitalism works
sorry the second economic update for today has to do with malls that's right
those either beautiful or hideous collections of stores that we all know
about especially here in the United States and as I have been telling you
in recent broadcasts huge numbers thousands of malls are empty now weeds
are growing up through the asphalt of the parking lot people don't go anymore
other uses are being examined for the empty stores that haven't been able to
find a tenant for years now but I was interested to learn in a recent
Bloomberg story that some malls are doing just fine I want to mention some
of them to you the Americana Manhasset wealthy north
sure of New York's Long Island the Forum Shops at Caesars in Las Vegas the Grove
mall in Los Angeles and perhaps the most elegant of them all the Bal Harbour
shops in Bal Harbour Florida they're doing great they're expanding they're
cramming more stores into their space they're renovating to make it even more
elegant and attractive to consumers and local wealthy people what's remarkable
is you often don't have to go more than oh a 10-minute Drive from one of these
malls to see one of the other kind of malls Bal Harbour it's literally the
mall at 160 third Street just up the road which can show you the abandoned
mall the dead mall in other words what we're seeing is a mirror to our economy
a tiny number of high paid high priced malls doing very well in an economy that
has made the rich richer and the vast majority of malls that serve the rest of
us are dying as I say it's a mirror but it's a mirror with a certain poetic way
of teaching us something and to show you how profound the mirror is let me tell
you about the most recent expansion of the Bal Harbour shops mall it turns out
that right behind the mall was a 70 year old Congregational Church right behind
the parking lot it had a famous large sign called worship this Sunday the sign
for the church by the sea as it was called Wow recent months the mall
purchased the church purchased the land on which the church sits
and has torn down the church to make room for more wealthy expenditures by
the wealthy people who enjoy the wealthy Bal Harbour shops mall there's something
even more poetic about the elimination of a church so that the wealthy can have
yet more in the way of an expensive mall let's go to the other end of the
spectrum for our third economic update and here I'm indebted to Matt bruenig of
the People's Policy Project they do interesting economic analysis there and
I found this one particularly interesting using the survey of Consumer
Finances a very important government document giving data about our economy
Matt booting calculated young families he took a look at families with heads of
the family below the age of 35 years and he said I want to look at the young
people of America and ask what their situation is how much wealth do they
have what's their situation what can we say about them as a particular group and
what he found was so arresting for me that I want to share it with you he
looked into the net worth of these families the net worth basically means
you add up the assets that such families have and you subtract from that the
debts they have to see how much their net worth is what they own less what
they owe and he made a further decision he excluded vehicles because vehicles
lose their value very quickly and so really aren't part of what you ought to
think of as a family's wealth okay 2016 what was the net worth the median net
worth of young families families below 35 years of age for the head of the
family well as I say this blew my mind median means 50% of the families have
more than this net worth I'm about to tell you about and 50% have less so a
median net worth of young families in America in 2016 not counting their
vehicles was here we go one thousand two hundred and fifty dollars that's what
the meaty half the young families of America have less than one thousand two
hundred and fifty dollars what does that mean it means that young people have no
fall back nothing to see them through an unexpected expense a sick child a lost
job a divorce you name it all the things that life can throw at you half the
young families have twelve hundred and fifty dollars or less to cope with all
of that nothing better gets across the lack of a recovery in the United States
since 2008 or the failure of a capitalist economic system to provide
for the young people that are going to be our future and the children they're
bringing into the world than to tell us as mr. Browning's work has done what
they're living on I've also told you in past broadcasts about the bizarre
decisions in the state of Kansas where they cut taxes on business drastically
they cut taxes on the rich drastically and promised the people of Kansas the
Republican governor did mr. Brownback that by doing this cutting of taxes they
would stimulate the economy of Kansas and provide lots of more jobs and with
the people having more jobs they'd pay more taxes and the
government would be in great shape those were the promises none of that came to
pass Kansas did not undo its unemployment that has had a higher
unemployment than most other states in the United States none of the good
things happened I now want to tell you about a state really nearby Oklahoma
Oklahoma they like Kansas governed by a Republican conservative who cuts taxes
and here are some of the consequences of the cut taxes by the way cut taxes
particularly for the fracking companies the oil and gas companies that are the
only part of the Oklahoma economy not in deep trouble and even they have had a
rough few years Oklahoma has taken things to a stage that I need to talk to
you about because it is so severe here's the first thing in many parts of the
city of the state of Oklahoma they have cut the length of the school
week from five days to four the weekend in these places continues through Monday
why because they don't have enough money they say to pay school teachers and the
salaries they offer among the lowest in the United States very few states offer
as little as Oklahoma the only perks they can give to their teachers for
paying them so little is to give them a day off let me take that a little bit
further with you if you don't mind what do the teachers do on the Monday they
don't have to go to school it turns out they have jobs to fill in their income
half of them roughly work at Walmart's and the other half in local restaurants
oh and what happens to the families whose kids don't go to school on Monday
well they just have to make do in whatever way they can
did that solve the state's problem no it turns out it didn't it turns out that
even if you don't make someone work on Monday giving them a chance to go get
paid at Walmart which has some of the lowest pay scales in the United States
or in a local restaurant and that doesn't pay well most of the time either
particularly in Midwestern states like Oklahoma that you're still paying your
teachers even with that way too little and guess what which should surprise
nobody teachers who aren't in overabundance in America don't want to
teach in Oklahoma so they have a shortage despite having shortened the
work week for the school kids and the teachers and how have they handled that
you'll love this I'll have to read it to you the shortage of teachers in the
school districts have found here we go now 1,850 adults without the necessary
qualifications who haven't been given emergency certifications and placed in
classrooms penny RIS Lee the principal of an elementary school in Wagoner
Oklahoma said to the media this year.i emergency certified my secretary as an
economist I am required to teach in every University I've ever been that the
future and well-being of the American economy in the world depends above all
else on the quality and the quantity of educated young people that enter the
labor market for us to be responding to the current economic situation by
savagely cutting the quality and the quantity of teaching we do to our young
people is the equivalent in economics of shooting yourself in the foot it is
irrational it is damaging in a way that cannot be
repaired for the tens of thousands of young people in Oklahoma going through
this kind of experience it's actually a kind of a stunning demonstration and it
needs some explanation and here's how it works when the capitalist economic
system gets itself into difficulty with economic downturns of the sort for
example we had in 2008 and which are regular occurrences with a capitalist
economy something has to happen and what typically happens is that we turn to the
government as I pointed out earlier and we ask the government to help people out
as they suffer with unemployment with cut work weeks for their kids schools
and all the other outflow of economic troubles and then we often see Democrats
liberals come into office because they're the ones who push the government
should help out but of course the Republicans in the business community
don't want the government to do too much for fear that everybody will get the
idea hmm maybe we should have the government do more maybe the government
should prevent these collapses from happening in the first place so they
hold everything back so the Democrats who try to do something can't do very
much because they don't challenge the system they just try to get a few things
done they're held back and eventually people say gee these Democrats are not
doing enough for us and in their anger they go back to the Republicans great
say the Republicans the real problem is the government let us starve the Beast
let us cut the taxes on the government doesn't do all the bad things it does so
they cut the government which then what throws people back into suffering
deregulates what businesses can do leading us into the next economic
downturn will we repeat the whole game so we get a politics which is America
Oscillation recurring the Republicans for a while until they blow it up then
we give me the Democrats for a while until they can't deliver what it is they
promised then we angrily back to the Republicans that's all mr.
Trump is he's the latest wave in this oscillation and guess what they're
Democrats are doing waiting for him to cause so much difficulty so much
disruption so much suffering that there'll be a wave the other way in one
of the next elections we're not solving our problems this way we're just kicking
the can down the road as we oscillate back and forth before I continue I want
to remind you that we maintain two websites that we invite you to make use
of they're open 24/7 they have no charge attached to you're using them one is our
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proceed and be twice as effective as we might otherwise be if we went separately
okay let me turn next to a place in the world that I go to nowadays because they
are crafting new initiatives and so once again I'm in Great Britain and once
again I want to talk to you about the British Labour Party they're sort of the
rough equivalent of the Democrats over there and this time I want to talk to
you about one of their leaders nothing who gets all the attention Jeremy Corbyn
but rather one of his close associates John McDonald he's announced a plan he
says that the people will be better served the British people with their
waters needs their energy needs their rail systems he proposes that these are
not working real well they're overpriced by the private companies that run them
they're not well-trained maintained sometimes not even safe and we can do
better than private capitalist enterprises what does he propose classic
and what's interesting is not that he proposes something new because this
isn't new but that it's becoming very popular in Britain which is why the
polls there show that if there were an election today the Labour Party would
win he proposes the reen a tional ization of water energy and rail in
Great Britain the government is going to take them over and he explains in public
speeches it will cost nothing here's how it works
right now he says the water company just to take them as an example a private
company borrows lots of money provides water to the British people and charges
the British people for the water enough money to pay the cost of delivering the
water to pay the cost of the money borrowed to do all of it the interest
charges and on top of that a profit distributed to the shareholders of the
water company says mr. McDonald if the government takes it over here's how
it'll do it the government will take over the enterprise and it will pay the
private companies in government bonds no cash a debt the government promises to
pay over five ten or fifteen years and then he points out we will immediately
be able to lower the price of water we deliver to every British home
why because we have to recover with the prices we charge what it costs to bring
the water like a private company what it costs to pay off the debt that the
government undertook to get the private water company into the government's
hands but we don't have to raise the price to pay anybody any dividends
shareholders because there aren't any so we can lower the problem we don't have
to charge as much as a private enterprise does because our job as the
government is to deliver the water not to make a profit in the way a private
enterprise does we won't have any shareholders to pay off the point is not
whether you agree or disagree the point is to understand this kind of thinking
as a solution to the problems of the British economy is becoming mainstream
again despite all the efforts all the efforts to demonize and dismiss this
approach this kind of thinking both in England and the United States for many
decades now the wind the economic and political wind is changing the final
economic update that we will have time for today has me listening closely to
the budget director for President Trump a man named Moe veiny some of you may
ever heard some of the things he says here's what he admitted over the last
few days publicly yes he said it's true we cut taxes dramatically trillion
dollars or more yes it's true he said on top of that we're spending more money
three four hundred billion more and yes he said if you put together a massive
tax card together with a massive increase in spending obviously the only
way the government can do that is if it borrows the money it's no longer raising
in taxes to spend even more than it was spending before and then he makes the
interesting admission that I want to make sure you all understand
speaking as if he were explaining this to children mr. Mulvaney says yes of
course if suddenly the government has to borrow of trillion dollars that it
didn't have to borrow before the tax cut that's gonna drive up interest rates
because the government's gonna have to persuade people to lend it money even
though the government is more in debt now than it has been for decades what is
mr. Mulvaney telling us he's telling us that we can expect to see now his words
interest rate spikes well folks there's the admission if the interest rates
spike up the cost of buying a home shoots up because that's what shapes a
mortgage the cost of buying a car shoots up because of the interest over the
years you take to pay off the car ditto for your credit card ditto for your
students college borrowing Wow turns out that cutting taxes for corporations in
the rich and spending more on the Defense Department is gonna walk you
right in your pocketbook that part was left out in all of the baits and all the
discussion mr. Mulvaney after the fact smilingly lets us know you live in a
system that doesn't work for you and part of my job is to make sure it
doesn't blow by you without your being aware of it we've reached the end of the
first half of this program thank you very much for listening please stay with
us as we move to a very interesting interview about a very important part of
the global economy stay right with us we'll be right back
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