Transcript
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Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives. Jobs, incomes, debts, the interest rates we pay, those our children are facing, and those coming down the road in. In an economy that is changing and changing fast. I'm your host, Richard Wolff. I've been a professor of economics all my adult life. And that, I hope, has prepared me to offer you these interpretations and analyses of what's going on in the economy around us. My eyes were caught recently by an article in New York magazine that in turn was based on a research paper produced by the National Bureau of Economic Research. Both the National Bureau paper and the New York magazine article were published in January 2018. And they ask and they try to answer the following. Did the Democrats in the Democratic Party let unions die? I want to deal with the question in terms of focusing on one let. That implies that the Democratic Party was a passive kind of observer. Maybe it should have intervened, but in effect, it let something happen. The implication being it could have and it would have happened anyway, and they just let it happen. It might be comforting to people in the Democratic Party to look at the world that way and to read our history that way, but I think it's a mistake. I don't think the Democratic Party let the labor unions die. I think the Democratic Party was a major instrument for extinguishing that movement in the United States. And let me explain. All of this starts in the great crash of the 1930s. We had before that pretty much a Republican dominated economic and political system. Republican Party was in power when the Great depression hit in 1929, Herbert Hoover and all the rest. And out of the Great Depression came a complete realignment of politics in the United States. And at the very pinnacle of that realignment was the Democratic Party.
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Why?
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Because the Democratic Party, led at the time by Franklin Roosevelt, made a deal with the trade unions in order to deal with the Great Depression. Basically, the deal went like, we, the Democratic Party, will stand up and do things for working people. In exchange, we want you in the working classes of America to support the Democratic Party. And the deal worked. It worked very well. Let's go through it. The Democratic Party got the enthusiastic support of the overwhelming majority of working people. They voted Mr. Roosevelt into office for successive presidential terms. No person in American history had ever served four terms. No politician had ever been as popular as Franklin Roosevelt. The Democratic Party and Franklin Roosevelt rolled into office and stayed into office across the entire Great Depression and across the entire World War II that followed. And what did the working people get well, when you think about it quite a bit, they got the Social Security system for the first time in American history. When you reach age 65, your working life behind you, most of it, you could have a decent, comfortable retirement. The government made a commitment to make sure you got that as an honor to the work of your lifetime. We got unemployment insurance. If you lose your job through no fault of your own, the government will arrange to provide you with a check each week to see you through your hard times. A minimum wage was passed so that any working American would earn enough for a decent minimum standard of living. And finally, a public works program in which unemployed people, millions of them, got the jobs that would allow them to continue paying their mortgages, to keep their homes, to keep their dignity, their sense of self, and, and to be productive members of the community. The working people got a lot and the Democratic Party got a lot, and they ruled the roost. But of course, somebody had to pay for all of these things, and who was that? Corporations and the rich had to pay a big chunk of it. Roosevelt told them, you must pay because you're the only ones who have the money to do this. And, and the country won't hold together. It'll blow apart. It'll have a revolution. It will dissolve if we don't take care of the tens of millions suffering through the Great Depression asking only that they get a job. And enough of the corporations and the rich saw the wisdom of what Mr. Roosevelt did. So he got the taxes and he got the loans he needed to make that deal with, with the working people. But when the war was over, the corporations and the rich decided they had had enough of this arrangement. They didn't like it. They didn't want to keep being taxed and have their money withdrawn to help average people. And so they saw their vehicle as the Republican Party. But they also saw that in order to win, being Republicans wouldn't do it. They had to destroy the, the coalition that made the Democratic Party powerful. And what was that? It was the labor movement, together with the left wing of American politics, Socialists, communists, and all kinds of other ists that felt themselves part of that Democratic thing called the New Deal coalition. So the Republicans who didn't like it went to work to destroy that coalition. They started with the communists, whom they painted as the evil agents of a foreign power. When they were finished destroying them, they went after another part of the coalition, the socialists, and destroyed them. And when they were done, they went after the third biggest leg of the coalition, the labor movement, and demonized them, often using the same words and language that they had used against the communists and the socialists. What did the Democratic Party do confronted with this head on assault on the coalition that had brought them to power? The basic answer to that question, instead of confronting and stopping and reversing the assault, they joined it. First they joined to get rid of the communists, then they joined to get rid of the socialists. And in the end, they didn't have the strength to prevent the assault on the labor movement, which they kind of half endorsed anyway. So they weren't passive. They were part of the very reaction against the success of of the Democratic Party. They didn't let unions die. They destroyed the coalitions that had built the unions up. They destroyed the coalition that the unions, together with the left in American politics, had used to come to power. The Democrats were not passive, they were active. And that only makes the tragedy of their weakness today all the worse. The next update I want to deal with has to do. Well, it's hard to put it. The best way to say it is the irrelevance of the government. We live in a capitalist system in which we pay an enormous amount of attention to what the government does. But I'm afraid it's because we overestimate how important the government is. Let me try to explain very concretely. In 2016, the last year of the presidency of Barack Obama, how many jobs were created in the United States? 2.34 million. By the way, two plus million jobs were created. Mostly those jobs go to the new people entering the labor force. The population of the United States is growing. We have over 300 million people. So we add millions every year to the labor force. So when I say to you, we created As a society 2.34 million jobs, it means we barely kept up with the growth in population. What about the first year of Donald Trump's administration? How many jobs were created? 2.17. Okay, so 2.34 million jobs created the last year of Obama. 2.17 million jobs created. First year of Trump. Why is this interesting? First, Mr. Trump's boasts, as usual, turn out not to be accurate. He isn't the greatest job creating president in the history of the world. He couldn't even match Mr. Obama's in his last year. So so much for that. But that's not the really interesting thing. Notice how close they are. Under Obama, we created 170,000 more jobs. Not for those people, of course, very important. But out of two and a half, or almost two and a half million, it's kind of small potatoes. What's going on here is that what the president does doesn't matter. The number of jobs created in this country depends on the viability and functioning of the capitalist system as an economy. And the role of the government is not that important. We spend way too much time talking about what the government does or doesn't do and way too little talking about how this system works. Finally, if the number of jobs created under Obama and Trump are very close, yet we know that the unemployment rate dropped drastically across the year 2017, the first year of Trump, then we can kind of see that it had nothing to do with Mr. Trump. What it had to do with the reason unemployment went down was because large numbers of unemployed people left the labor force aren't looking for work anymore and so they're not counted as unemployed. The decline in the number of unemployed is more about discouraged workers who don't even look anymore than it is about job creation. Because as you can see, fewer jobs were created under Trump when the unemployment went down than under Obama when it didn't. Next item. Three international banks were fined early in February a total of $47 million for manipulating contracts for futures. That's a kind of security gamble in the stock market. I know this is old stories that banks are being fined is something I keep coming back to now for years in the United States. But I wanted to read to you and draw a lesson from this latest three big international banks together, $47 million. Well, I have to say again, $47 million for three huge international banks is as if I found you guilty of a major crime and insisted that the punishment was if you would give me 82 cents, you would reach into your pocket, throw the change at me and laugh. That's what ought to be done here. But in our mass media we don't do that. Listen to the statement of United States Department of Justice Assistant Attorney General Cronin in commenting on the misdeeds of these three banks that got this mild slap on the wrist. I'm quoting. Their behavior reflects a disturbing and reckless trend of individuals and companies seeking to put in illicit gains and profits above honest and law abiding conduct. Oh goodness, sounds like my teacher from civics class long ago. Honest and law abiding conduct, this fine. If that's the crime that they sought illicit gains and profits, the fine is an outrage. And it is simply the latest string in the illegal or unethical behavior of big banks. But what strikes me, as it always has, is we have yet another in the long string of criminal or unethical behavior that the leading officials in the government themselves call illicit gains and and profits and reckless and disturbing. But no one seems to imagine that. One response to private banks doing this is to substitute government banks, banks that are accountable to the people we electcountable even to us. No one seems to go that direction. Even though many banks in most other capitalist countries are public, it's not as though we've never seen it. It's not as though we don't know that in North Dakota we have a bank that's public, run by that state, that's been there for 100 years and has a clear track record of making fewer mistakes and paying better dividends to the people of North Dakota than these big banks do anywhere else in the world. And why does no one say, wait a minute, if these banks are always engaged in illicit activity, maybe what they need is some sunshine, some light to come in. Maybe they need the banks to be run as cooperatives so all the people in the bank know what's going on and all the people in the bank have power so that they can catch and identify and deal with criminal and or unethical behavior. Here would be some solutions that solve this problem. Instead, we give them small fines, we slap them on the risk, and then we act all, all shocked and surprised when one after another of these officials, year in and year out, is caught for every kind of crooked behavior that private enterprise has ever displayed anywhere. Before I go on, let me remind you we maintain two websites that are there for your use. Please make use of them. They allow you to communicate to us what you like and don't like. They allow you with a click of your mouse to follow us on Facebook, Twitter, Instagram. For those of you that are interested, there's more material that expands on what we do on these programs. The first website is democracyatwork. All one word, democracyatwork.info and the second website is rdwolf with two Fs.com partner with us. Make use of what's on those websites. They're available 24 7. No charge ever whatsoever. And finally, for those of you listening on the radio or podcast, if you would like to see this program as a television program, that option is available. Please go to patreon.com p a t r e o n patreon.com economicupdate and you can see this program as a television program. When Mr. Trump came to office the same month, November 2016, he immediately brought lobbyists who had been working for private enterprises into the government he got caught doing that which directly violated what he had promised in his campaign. So he announced a new rule making it illegal for five years. There was a ban on lobbyists. It was a big. See how strict I am. I'm not doing what I promised I wouldn't do. I'm really a hard nosed anti lobbyist guy. There was a provision in the little thing he did there that you could waive the requirement of no lobbyist in the previous years and no lobbyist after your government service. And of course the waiver has been used over and over again ever since. No draining of the swamp. If anything, an expansion of the swamp. But one of them caught my eye and I need to tell you, excuse me, about it. This has to do with Ms. Kaylee, and I hope I'm pronouncing her name correctly, Takaz. She has become an advisor to the Secretary of Agriculture with respect to now this is key dietary guidelines for Americans. In other words, she's now working in the government to provide guidelines for what we teach our children and ourselves is good for us to eat and drink and what is not okay. Guidelines are issued every five years. She's going to be working on that because she's an expert. Now let me tell you about where she comes from to give you an idea of what kind of expertise she will be contributing. Here we go. Kaylee Takaz was director of food policy for the Corn Refiners Association, a trade group for corn syrup manufacturers for two years before leaving for the Trump administration in July 2017. That's what she did. The Corn Refiners association makes corn syrup, which is a sweetener. It's a sweetener that has been shown to have all kinds of health effects that are not good and to be nutritionally dangerous, if not useless. Prior to that, she lobbied for the Snack Food association and the National Grocers Association. Prior to her lobbying days, she spent a year as a research analyst on tax policy and at the American Legislative Exchange Council. What is that? Alec? It's called a group of corporations and conservative lawmakers that work together to craft business friendly model legislation. She also spent the year before that at the Charles Koch Institution Institute, named after its billionaire founder and CEO, the and part owner of the global fossil fuels and materials conglomerate Cork Industries. The Corn Refiners association, where she worked just before going into the government, consists of the four biggest corn syrup producers in the United States. Archer Daniels Midland, Cargill, Ingredion and Tate and Lyle. She then lobbied the usda, the Department of Agriculture as well as the House, Senate, and Environmental Protection Agency trying to get dietary guidelines that were interesting to and supportive of her corporate clients. That's not keeping lobbyists at a distance. That's keeping lobbyists closer to you than your undershirt. Next item. Trump has been dialing back regulations across the board and particularly working to dilute Dodd Frank. Together with the Republican majorities in both the House and Senate. The Dodd Frank law was supposed to regulate banks. So it came as no surprise, with the reduction of these regulations to discover that banks are now lending loans deemed as risky as what they were just before 2 2008. It leads me as an economist to question, is it the situation that the bankers learned Nothing from the 2008 crash, and now that the regulations are being withdrawn by Trump, they can go and do it all again? Or are they, in fact, quite smart? They did learn something. What they learned is that even if they fail, they'll be bailed out at taxpayer expense. So then why not? I don't know how to answer that question. I leave it to you, because either way, the message, when you think about it, is pretty much the same. Finally, we live in a society of unprecedented inequality of income and wealth. You know, 35 years ago, the United States was one of the least unequal of the major capitalist countries. Today, we are the most unequal. I don't blame Mr. Trump. This has all been happening for 30 or 40 years. But here we sit as one of the most unequal societies in the world, and we have tried as a nation over the years, a whole host of things to try to undo that inequality, to reverse it, to modify it. The war on poverty. I could go through the list of policies we've had. They haven't worked. Inequality is worse, not better. The efforts we made, the laws we changed, the tax situation, we changed, the special skills we taught, the special job opportunities we created. It didn't work. And I want to offer an explanation why and what to do about it. I think the efforts, well intentioned, as many of them, were undertaken by both Republicans, Democrats and others, didn't take account of the key issue, which is the system we live in. And by that I mean capitalism, because it has a name. And I want to be very clear about what I mean. In a capitalist system, enterprisesand most of them are corporations. As you know, or you should know, most of our economy is run by corporations. In a corporation, a handful of institutions and people own the bulk of the shares, and they use those shares that they own to elect one share, one vote. The board of directors of the company, the people who run the big corporations. General Motors, General Electric, General, everything else. And now comes something that should surprise no one. If a tiny group of people, major shareholders in most companies, 20, 30, 40, that's it. Board of directors in most companies, 12 to 20 individuals, that's it. They may have thousands of employees, tens of thousands of employees, but the number of people at the top is always the same. Very, very small minority of those engaged in any corporation, in every corporation. Here's the thing that should surprise no. If you allow a small number of people to be in that position of power, you cannot be surprised if they take the profits of that the enterprise earns, the corporation earns profits that all the workers there helped to produce. You cannot be surprised if they, at the top, who dispose of them all, give disproportionate amounts of them to themselves. Of course, they decide to distribute dividends to shareholders. They're the major shareholders. Of course, they decide to give huge salaries to the top managers who sit on the board of directors because those are the people they work with, those are the people themselves who make the decisions, and they enrich themselves. You can't really be surprised that for the mass of people that are not part of the running of the company, they don't get the big bucks. They never did. The way you overcome inequality, the way you make less inequality, is by changing this system. If the distribution of the profits everybody helped produce were distributed democratically by everybody, they would never give a handful of people the bulk of what they all helped to produce. They would distribute it, much less unequally. And let me say the same thing the other way. If you don't deal with that institutional arrangement, if you don't deal with that structure of the enterprise, all your efforts at an equalizing of our inequality will come to the sad end that we just saw. They won't work. It's a sobering lesson, but it tells you where the solution lies. We've come to the end of the first half of this program. I want to thank you for being with us. And I remind you, stay with us. I think you'll find the second half of today's program very interesting. Welcome back, friends, to the second half of today's edition of Economic Update. I'm very pleased today to address a topic with a guest, a topic that we have not devoted enough attention to, and it's broad, broadly defined as the relationship between law, the practice of law, the justice, criminal justice system on the one hand, and the economy on the other. If we're going to do economic updates. We have to also update the relationship between the law and the economy. And it's a very important one. My guest today is Leonard Goodman. He's a Chicago criminal defense lawyer with 25 years experience. He has done both high profile and indigent law. He's been a champion of defendants on both levels. He's also won cases at literally every level in both state and federal courts, including the United States Supreme Court. His current clients include the former governor of Illinois, Rod Blagojevich, I hope is the right pronunciation. His work on behalf of the wrongfully convicted has won awards, such as for an Afghani man held for 12 years at Guantanamo Bay without charges before his release in December 2014. Currently, Leonard Goodman is an adjunct professor at the DePaul University College of Law and a member of the advisory board of the center on Wrongful Convictions and at Northwestern University College of Law. He also founded the Leonard C. Goodman Institute for Investigative Reporting, which supports independent journalists doing investigative projects. He writes frequently for in these Times Magazine on law and politics. It is a pleasure to welcome Leonard Goodman to Economic Update. Thank you so much for joining us.
