Richard Wolff (2:44)

They use aluminum, etc.

Economic Analyst (2:47)

Also in large quantities. These companies will be hurt because they're going to have to pay higher prices for the steel and aluminum they buy from the American companies that get protected by the tariff. So now let's look at what this means. The reality, as any trained economist knows, is on the one hand, you may get some more jobs in the aluminum and steel business because their prices are going to go up, they're sitting pretty. But you will certainly lose jobs in the companies that buy a now higher priced steel and aluminum because their profits are going to go down and their conditions are going to deteriorate and they're going to lay off workers. No one knows in advance how this will play out. There's good reason to believe that the companies buying the higher priced steel and aluminum will be more negatively affected than.

Richard Wolff (3:48)

The few companies in America that remain.

Economic Analyst (3:50)

That produce steel and aluminum. Certainly Mr. Trump and his advisers to don't know how this plays out. And this is the most important thing.

Richard Wolff (4:01)

For me to get across.

Economic Analyst (4:03)

They don't know, but they don't care.

Richard Wolff (4:07)

And let me explain why Mr. Trump was elected president in good part because he promised Americans whose economic conditions as we document every week, have been deteriorating pretty badly for most of the time.

Economic Analyst (4:25)

Since the crash of 2008. He promised them to turn the situation around.

Richard Wolff (4:31)

We have explained to you over and over again that he cannot do that.

Economic Analyst (4:36)

And he is not doing that.

Richard Wolff (4:38)

That continues the tax cut he gave.

Economic Analyst (4:41)

To corporations and the rich in late.

Richard Wolff (4:43)

December are just part of that story. Well, the poor President Trump, who can't.

Economic Analyst (4:50)

Deliver on the promise to improve the actual conditions of the American mass of people, therefore resorts to symbols, to theater, to pretend activities that make it look.

Richard Wolff (5:04)

Like he's doing what in fact he can't do.

Economic Analyst (5:08)

So he slaps tariffs, so he ejects immigrants.

Richard Wolff (5:14)

He does all this stuff to blame.

Economic Analyst (5:16)

Other people for the economic problems. Foreign immigrants notice foreign trade competitors, foreigners, always good to scapegoat foreigners when your system and your society are in trouble. So he's doing that. And this is just more symbolism. But Mr. Trump has a second reason for doing this.

Richard Wolff (5:39)

By putting tariffs on steel and aluminum.

Economic Analyst (5:42)

He makes those companies depend on him. They're going to have nice profits now if he imposes those tariffs because they can jack up their prices since the.

Richard Wolff (5:51)

Cost of importing those things has gone up.

Economic Analyst (5:54)

They will depend on those tariffs staying in place for their profits.

Richard Wolff (6:00)

So they're going to become big boosters of Mr. Trump.

Economic Analyst (6:03)

They have to. They will depend on him. At the same time, the automobile and aluminum can companies are going to be going to work to persuade Mr. Trump to reverse himself and not impose or not continue those tariffs. Headlines indicate that the leading economic adviser of Mr. Trump, Gary Cohn, is busily organizing auto companies and can companies to come to Washington. In other words, Mr. Trump positions himself in the middle and so he can let the car and can companies on.

Richard Wolff (6:39)

The one hand compete with the steel and aluminum companies on on the other.

Economic Analyst (6:44)

Who'S going to back him more? Who's going to contribute to his reelection campaign, which is already underway. More he can have them bid for him because they will depend on his decision. He likes to be in that position.

Richard Wolff (6:58)

It will help him run for office.

Economic Analyst (7:01)

As usually is the case, countries that impose tariffs are doing it for domestic reasons. They don't care what the long run international effects are because they won't be in their offices that many more years.

Richard Wolff (7:19)

That's true for Mr. Trump as well. And as a result, don't look at.

Economic Analyst (7:24)

The details of the international effects, because that's not what this is about. This is domestic politics of Mr. Trump.

Richard Wolff (7:33)

In an economic system that is imposing hardship on the mass of people. That's the fundamental cause and function of these tariffs. The next issue has to do with reverberations around elections. And the one I want to talk about is President Trump's nationalism, the America first idea. It is already provoking real trouble between the United States and what used to be its allies, and that's going to have economic effects like. Let me give you just two examples. Number one, the United States withdrew from the treaties it signed two or three years ago with many other countries coming to a resolution with the country of Iran. Basically, Iran gave up developing its nuclear capabilities in exchange for the dropping of sanctions that had been put in place that hurt the Iranian economy. The United States, its major global allies, participated. Then Mr. Trump withdrew. By the way, he calls it a withdrawal. The rest of the world calls it breaking a treaty that you had signed. The United States used to criticize other countries for breaking treaties. It broke this one and it went further. It threatened to punish any company in any country that did business with Iran, contravening the American sanctions. Now, the French economics minister, Bruno le Maire, denounced the United States for this. They are not going to allow, he said, the United States to be the.

Economics Professor (9:17)

Policemen of world trade.

Richard Wolff (9:19)

Try to imagine, those of you listening in the United States, what it would mean if the French government announced tomorrow that was punishing American corporations for doing business with some country that the French.

Economic Analyst (9:32)

Had a problem with. Or maybe the Germans could start that, or the Japanese or the Chinese or the Russians.

Richard Wolff (9:39)

What kind of a society, what kind of a world would we have in the past when countries tried to control each other this way? It led to war. And you ought to be worried by a country as big and important as the United States is imposing this kind of conflict. The Europeans are busy working out deals to get around the American sanctions. But there are French companies Total, their big energy company, Peugeot, their automobile company.

Economic Analyst (10:10)

That are already saying they don't dare.

Richard Wolff (10:12)

Trade with Iran because they don't want to be hit by sanctions from Mr. Trump.

Economic Analyst (10:17)

But that means they're going to be hurt.

Richard Wolff (10:19)

Those companies, they're going to lay off.

Economic Analyst (10:20)

Workers, they're going to hurt the French economy in.

Richard Wolff (10:23)

In deference to America's decision to withdraw. This leads to trouble and conflict and.

Economic Analyst (10:31)

Tension, and those things lead to war.

Richard Wolff (10:35)

And I'm not saying something that's hypothetical. We know that from the past. And if you do not learn from it, you are condemned to repeat it. As we have been told, when President Trump was running for office, he made a point, especially when speaking to evangelical audiences, that he, as president, would get rid of the Johnson Amendment. I'm assuming that many of you may have wondered what exactly that was. So let me explain. And for those of you who already know, my apologies, but we should all be on the same page here. The Johnson Amendment was passed in the United States Congress in 1954. That makes it 63 years old. And it basically said that charities that enjoy a tax exemption, in other words, charities that the federal government allows to earn money without paying taxes on it, to spend money without paying sales taxes, and so on, cannot engage in politics. They should not be involved in supporting one candidate against another, etc. Tax exempt institutions include churches, charities, and so on. And that means churches have been barred from explicit political activity as a condition for enjoying their tax exemption, which saves them an enormous bundle of money without which many churches could not survive. So Mr. Trump was basically saying, I want to free you to the churches, particularly from the limits of the Johnson Amendment. So I'm going to get rid of it, and I'm going to hold back the IRS from bothering you. This left the impression, which, of course, Mr. Trump was pandering to in that speech. This left the impression that churches are somehow being really restricted in what they can say and do politically by fearing the loss of their tax exemption because they could be found to be in violation of the Johnson Amendment. To correct that misunderstanding, willful though it is, let me tell you that only once, once in 63 years has a charity of any kind, including any church, had its tax exemption taken away because of its political activity. Once in 63 years, is the political activity of the churches being effectively held back by the IRS and the Johnson amendment? Not if you get one case in 63 years.

Economic Analyst (13:42)

New.

Richard Wolff (13:43)

That means the IRS is mostly looking the other way. And in case you're interested, what was that one case? It took place because a church did something in 1992.

Economic Analyst (13:56)

It was a church in Binghamton, New York.

Richard Wolff (13:59)

And it lost its tax exempt status because the church took out paid newspaper ads urging Christians to vote against Bill Clinton for president in 1992. That was so egregious that the IRS proceeded to took away the tax exempt status for that church in Binghamton one time. No one else has had that experience in the 63 years that the Johnson Amendment has been there. In other words, it was a phony issue to which Mr. Trump pandered for votes and may well have helped him. I don't know. Let's take a look at then at what the IRS does with tax exempt organizations in the 1970s, according to one study. And by the way, I'm relying here on the research of Professor Philip Hackney. He is a professor in the law school at Louisiana State University and has written wonderfully about this whole subject from a legal point of view. According to professor hackney, in the 1970s, there were about 1,000 IRS Internal Revenue Service agents who were responsible to look at, to study, to review what tax exempt institutions were doing to see if they violated any of the rules, including the Johnson amendment. In 2013, that number had dropped to 842. That is a remarkably large drop in the number of agents the IRS even looking at what churches and other tax exempt institutions do. Meanwhile, as the number of agents looking at these tax exempt organizations drops, let's see how many of them there were to have their situations reviewed. In 1980, there were roughly 320,000 tax exempt organizations that the IRS reviewed. By 2016, when the number of agents dropped in the way that I just described, the number of tax exempt institutions was 1.6 million. That's right. Between 1980 and 2016, the number of tax exempt institutions went up five times, whereas the number of IRS agents reviewing them dropped significantly. And what's more, the new budget proposed last week by President Trump calls for further cuts in the IRS on top of those big cuts that have happened since 2010. What is this all about? This is all about deregulation, something that conservatives are pushing all the time. You deregulate, among other ways, by having fewer regulators looking at institutions that may well be doing all kinds of things that are illegal. Let me give you an example of some of the things that the IRS has caught. And again, I'll use Professor Hackney's work. The Red Cross, you've certainly heard of that. The Red Cross is still struggling to quell concerns because in 2013, the center for Investigative Reporting and the Tampa Bay Times zeroed in on 50 charities that had spent as little as 3 cents on the dollar they raised for charitable activity and work tied to their missions. The Red Cross came into a lot of criticism for activities in Haiti and so on. In other words, the IRS discovered that these charities were spending very little money on what they were raising money for and a great deal of money for themselves. In 2016, the Federal Trade Commission, all 50 states and the District of Columbia, settled with something called the Cancer Fund of America and Cancer Support Services, Inc. And the leader of both groups, a man named James Reynolds Sr. Barring them all from operating in the charitable world again, the Federal Trades Commission alleged that most of their money, they spent most of the money they raised not on cancer, but on families, friends, and so forth. These are the kinds of things the IRS is supposed to find and fix. But we're deregulating, so we're not doing that. Most Americans file automatic taxes for money that has been withheld from their paychecks. They don't do hardly anything that a machine can't pick up. If there's something irregular, if it doesn't show up the right way, basically it's richer people and people engaged in illegal activities that manipulate and maneuver in such a way that the IRS needs to look into it. Deregulating makes it easier for them, and that's a large reason why we have it. But as a freedom for churches to be politically expressive, it has not been a serious obstacle to that. And claims to that are fake. You might even call them fake news if you were looking for a phrase.

Economics Professor (20:07)

We're analyzing tariffs, and what we did in the first half was to show that the tariff, when you impose it, helps protect jobs, as Biden and Trump and officials tell us, but only really in the industry where the tariff applies. In my example, the automobile industry, American auto workers will have their jobs protected, but workers across the American economy will have their jobs jeopardized by a tariff on electric vehicles. Because everywhere else in the world, Americans will have a hard time competing with local companies in Europe, Asia, Africa, Latin America. Because those companies there, when they buy trucks and cars as fleets, as inputs to their business, they can buy from China at 30,000 a vehicle. Their American competitor cannot buy Chinese vehicles at 30,000. That's what the tariff makes impossible. They have to pay 60,000 because Mr. Biden has imposed a 100% tariff tariff. So that disadvantage for the American company means they'll have to have prices that are higher than they otherwise would have because they can't buy the cheap Chinese truck or car. And by having to price higher, they'll lose business. And when they lose sales of whatever they make, they lay off workers. Aha. So the tariff that protects auto workers jobs jeopardizes all kinds of other jobs in companies that have to pay more for the vehicles that they will now be buying. An honest politician, which neither Trump nor Biden on this subject are, would have to tell you that a tariff could protects some jobs and destroys others, because that's the truth. And so now it turns out a tariff is good for some workers and good for the profits of those companies, but not for others. And now I can explain to you what you might not have understood before. In every capitalist country, this kind of issue has always been there. There have been companies who saw profits in having free trade. No tariffs, no government intervention, the so called free market, because they thought we don't want to have to pay higher prices or we don't want tariffs. And then there were always other industries, like today's electric car industry that needed tariffs not only to keep their profits, but to make any profits at all. So there's always a struggle, there always has been, between those companies that want tariffs or protection. It's called, it's by the way called protectionism. When you interfere this way and those industries that don't. And whether we have a period of free trade or a period of protectionism is not some mystery. It doesn't fall from the skies which one we have. It's purely an outcome of a fight between two groups of capitalists, one of whom sees more profit with a tariff and the other one without one. And what we have, the rest of us who live in capitalist economies, we have to live with which, with whichever one of those two groups of capitalists was the stronger. Now here's the problem. A tariff can only be put in by the government. So the two different groups of capitalists fight to persuade the government. In one case put on a tariff, in the other case leave off the tariff. And when you're trying to convince the politician, what do corporations do? Number one, they bribe if and when they can. Number two, they donate to the candidate or the party. That's a polite term for bribe. Number three, they hire lobbyists to work with the politicians.

Richard Wolff (24:48)

They do everything they can to get.

Economics Professor (24:50)

The tariff if that's what's profitable, or to prevent the tariff if that's what's profitable. And then both capitalists. Here we go now, want to persuade the public to go on their side. Because if you want tariffs and you can get public opinion to be for tariffs, you'll get it if you don't, if the other side gets the public opinion, you're going to have a harder time getting what you want. So there's an effort made. And so here we go. The people who want there to be tariffs in America right now want to see politicians go out there and help them develop public opinion so it's in favor so you can vote for the tariff I want and need. So they send out the president, the congressperson, the senator, to give a speech, to give a hundred speeches. Tariffs protect jobs. Of course you don't tell the truth. It protects some jobs and it destroys others. Turns out you can't even know in advance which is the bigger effect. Will more jobs be protected than lost? Maybe very hard to tell, very hard to measure and impossible to predict. They can't be honest because what they do is a kind of advertising. And you know what advertising is? That's when you say everything real and everything you can get away with that's good about a product, and you deny or hide everything that's bad. That's what advertisers are paid to do. It's a form of lying. And that's what the politicians do. If they're pro tariff, they'll tell you, gee, it would be great for everybody, protect jobs. If they're against it, they'll tell you the stories about how it hurts jobs. Don't be fooled. If anything, that's the central message of today's program. When you hear descriptions of whether an economic policy is good or bad, please remember in every case it's neither one nor the other. It's a mixture. Some people gain, others lose. Some companies win, others don't. Some profits are protected, other profits are destroyed.

Richard Wolff (27:26)

It's usually that way.

Economics Professor (27:30)

And an honest person, journalist, professor, politician will tell you that, be square with you, help you to understand the complexity rather than living in the fantasy land that it's all real simple. If you just have this tariff, which I happen to want, everything will be best for everybody. Not true. So you know what we can say correctly, that tariffs, tariffs boost prices. Tariffs make the prices we pay higher.

Economic Analyst (28:12)

Than they would otherwise be.

Economics Professor (28:14)

Because that's the point. The point was to protect the American so they could sell at a higher price than we would have to pay if we bought it abroad. We wouldn't be affected by inflation if we didn't have the tariff, which makes it worse. Now, what politician has been honest enough to say to you, on the one hand, we are fighting inflation, on the other hand, because we want to please the capitalists who want tariffs on electric cars. We're making the inflation worse. But okay, we're advertisers. We won't tell you about one of them. We'll tell you about we're saving jobs for auto workers. We won't tell you the that we're worsening the inflation. That is itself a job killer. As prices go up, more and more people can't afford things. And if they can't afford things whose prices have gone up, there's less incentive for employers to hire people to produce when the price is too high for people to buy as much as before. So guess what? When you worsen an inflation, it's bad for jobs. There we have it again. Some workers are protected, others are thrown under the bus. Last point. We don't live in the world alone. If we put tariffs on things, it hurts foreigners. The Chinese electric car company can't sell as many cars in America because even though they only would want 30,000 for the car, Americans have to spend 60,000. So they're not going to buy the Chinese cars. That's bad for the Chinese. They don't like that. That hurts their profits, hurts their jobs. Guess what they can do? You know, they can retaliate. They can put tariffs on their country. So if we have American goods trying to be sold in China, they're going to have a higher price because the tariff is going to be put on them. Chinese have already done that. They'll be doing it some more. When you add the retaliation and its effects, more jobs are going to get lost in this country. Underscoring the reality. Don't be used as a tool. The working class is bombarded with false claims. Either that tariffs are a very good thing and we will all be better off, or that they're very bad thing and we'll all be worse off. They're both playing with you. With us. Lining us up to support them to get the tariff they want or to prevent the tariff they don't want. We're just being used. This is not our issue. We should fight for the jobs we need and want. Don't rely on capitalists to have a fight with one another. And, and imagine they're concerned about your job. They aren't. They're concerned about their profits. And we ought to be concerned about what our lives are like. Don't be fooled. Thank you for your attention and as always, I look forward to speaking with you again next week.