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Sam. Saint gonna change.
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Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives, our jobs, our incomes, our debts, those coming down the road to confront us, and those talking to our children sooner or later as well. I'm your host, Richard Wolff. I've been a professor of economics all my adult life, and currently I teach at the New School University in New York City. Well, before jumping into the economic Updates for this last week, let's take stock. What a week it was. In fact, what a last few weeks it's been, economically speaking. Let me just mention a few of the big events. Donald Trump, President of the United States, suffered the second major defeat of a major initiative since he's become president. The first one was his attempt to ban Muslims from a variety of countries from coming into the United States. Two separate courts in the United States have struck that down. And so he was defeated twice. Now. He proposed with the Republican Party, a repeal of Obamacare, the Affordable Care act. And in the run up to a climactic vote in the House of Representatives, basically he was defeated again when a significant number of Republicans, conservative Republicans, indicated they would join with Democrats in voting against such a repeal. And so it was never allowed even to get to that point. Defeat number two. For a president elected with such promises and with many, many hopeful signs on that part of the political spectrum, these defeats are having major effects. The first one was a sharp downturn in the stock market as investors began to wonder whether bidding up stocks since Mr. Trump's election may have been a big mistake in if he can't get through all the glittering promises that made stock investors feel as though it was their time indeed, in this world. So that shook the world economy. But it was only one of many. Let me give you a few of the others. The prime minister of Great Britain, Mrs. May, sent a letter officially starting the process of separating the United Kingdom from the European Union, of which it has been a part for a long time. This is a major change in the world capitalist system. The two major economies of Europe are Britain and Germany. They kind of dominated. This is a separation of the two largest parts of the European Economic Union and a decision to go their own way. They're now going to negotiate for a couple of years in what promises to be bitter, protracted, with people now observing, wondering whether they'll even reach an agreement and how much of the division will cost the economies both of Great Britain and of the rest of the European continent. It also means that one of the three great capitalist centers of the world. North America, Western Europe and the Far east are now going to be reduced to North America and the Far east because the disunion in Europe looks to be pretty severe and terminal. And that further reduces to a global economy that has two poles, the United States at one end and the People's Republic of China at the other. And that will take a long time to play itself out, but is a major change in how the world economy looks and where it's going. But I'm still not done. In France, something is playing itself out. And France, after Germany is the second most important economy on continental Europe. A drama is playing out that will come to a head in the next few weeks with elections there for the presidency. And here we see again an extreme sort of shakeup of the world economy. The two leading candidates are an extreme right wing person, Marina Le Pen, who favors an end to France's participation in the European Union, who is an admirer of Donald Trump, who also, and this is very important, is a ferocious anti immigration candidate who wants to expel from parts of Europe many of the immigrants that have fueled Europe's economic rise over the last few decades, etc. On the other hand, is an ex socialist. He's come more to the middle. His name is Macron, but he was part of the Socialist Party, the right wing, if you like, of the Socialist Party. And the Socialist Party, let's remember, was the second major party in France, which currently governs and sits in the presidential palace. So what's going on? Well, French politics is disintegrating. The leading right wing candidate, Mr. Filon, was caught with his hand in the cookie jar, generously giving money, state money of course, to his wife and children. He got caught. He's in the press all the time. He's done as a politician. So the official right wing, the conventional right wing, the establishment right wing, has nobody. If that sounds familiar in terms of the American election, good, then I'm getting my point across. Ms. Le Pen is not considered likely to win, but she's a strong candidate and she's a bit of a Trump type phenomena. On the other hand, you have, well, Roughly, something like Mrs. Clinton, a Democrat here. Well, in France that would mean a socialist, a right wing socialist, very moderate like Mrs. Clinton, a centrist democrat. And over on the far left, you actually have two candidates, unfortunately for them, splitting the left wing vote. Otherwise they would be a major player here, the old left wing of the Socialist Party and an anti capitalist party. That's an important player in French politics. So you See, the middle is falling apart. The conventional rules of politics and economics don't work. And I think something is going on that is worthy of my attention and of yours. The world capitalist system is in deep trouble. We have not recovered from the crash of 2008. All complaints or claims to that point, I believe are mistaken, and I'll say more about that as we go on in this program. But at this point, I think the evidence is mounting in the realm of politics that it's not politics as usual, because it's not capitalism as usual. Capitalism, at least in North America, Western Europe, Japan and places like that, has never recovered from the shock of having another great crash. And after the horrible one in the 1930s, another one. Now, since 2008, the mass of people have not recovered, which is why they are voting in ways they haven't for a long time, producing a Trump, a Le Pen, a Brexit, and on and on and on. We're going to be watching this a great deal, but at this point, I wanted really to underscore that something major is shaking politics. Last little detail. Recent polls have asked the American people, who among the major politicians of our time do you most admire? The answer has been Bernie Sanders, far and away tells you something about American society, that a man who calls himself a socialist who does not run from that label is the most popular political candidate on the horizon. It is contrasted with the declining popularity of Mr. Trump that has no historical precedent either. All right. Well, before jumping into the regular short economic updates that we usually focus on in the first half, I wanted to remind you of something we are very proud of here at Democracy at Work, the organization that produces this program. We've recently been joined with partnered with Free Speech tv, which brings this program in a televised form all over the United States to millions of households. We're very proud of that. And for those of you that might be interested, you can see this program in a television form Sunday evening, 7 o' clock Eastern time, with the appropriate adjustments for Central, Mountain and Pacific time. And we're just so proud that Free Speech TV was interested enough in what we do to enable us to reach more of you through a televised format. And finally, for those of you who like this program who are appreciate the economic updates we provide, but would like to take a further step to become involved with others who share your perspective, to make the very changes that this program shows us we need, please let us know of your interest groups are forming that are committed to the kinds of change we talk about, particularly having to do with worker co ops. And if such a thing interests you, let us know. And the easiest way to do that is to get in touch with us through our two democracyatwork.info. that's all one word, democracyatwork.inf o and the other one rdwolff. That's me. Rdwolff with 2f's.com. both of those websites are available to you 24. 7. No charge whatsoever. And they allow you to communicate with us if you're interested in such groups or indeed to communicate anything you would like to do or have us do, to follow us by a click on Facebook, Twitter and Instagram and in general to take advantage of all that we put on those websites. All right, all preliminaries taken care of. Let's jump into the updates. Again, I want to stress these are signs of changing times. So let's begin with a bizarre letter sent by a number of the wealthiest people on this planet who reside in the state of New York to the current Governor of New York, Andrew Cuomo. Some of these people include George Soros, a multi billionaire, Stephen Rockefeller of a family whose name needs no further comment, and Abigail Disney. Yes, of that Disney family, they wrote a letter together with a whole bunch of other people asking the governor of New York to please raise their taxes by a lot. It might raise as much as $2 billion by taxing top income earners, people earning over $650,000 a year. Just them. So let's be clear. The richest, some of them are asking Governor Cuomo to tax them more heavily than he currently does. And then the and that the legislature of New York likewise doesn't tax them. Wow. What's their argument? Their argument is that education, highways and bridges, indeed everything that the state does for people is in trouble, is being cut, is not being adequately maintained. They are fearful that the society that ultimately they too depend on is falling apart. And since they are billionaires and earn wild amounts of money, a tax on them will not hurt or impinge their lifestyles, not in the slightest, but could help maintain a society that they too depend on. It's a sign of the times not only that wealthy people are able to see that and are willing to pony up something for it, but even more important is the fact that they are a small minority, that the bulk of people who earn big bucks like they do have no interest in, have no support for, and are utterly absent from, from this initiative. That may help us to understand why a similar letter sent last year by many of the same people Got nowhere. And my prediction, and that of most of those who observe the governor and the legislature in New York is this year's letter will get exactly the same response as last year's, but it is a sign of the times. Here's another one. This one might be called the distance between reality and Political fiction. Tuesday of last week. Of this last week, President Ford tweeted his pleasure at hearing that the. Excuse me. President Trump tweeted his pleasure at hearing that the Ford Motor company was investing $1.2 billion in Michigan to build some facilities. Jobs, jobs, jobs. President Trump tweeted. Well, it led me to look into it. What was Ford doing and how many jobs were we actually talking about here? 1.2 billion is a lot of money. Could be a lot of jobs. Well, I won't bore you with the details, but here is what the Ford Motor Company said would be the result of the 1.2 billion it's investing in Michigan. And I'm going to quote you because this is so clear and so important that I want to get the words right. This investment will either. Here we go. Retain or create 130 jobs. Yes, you heard me right. Retain means keeping a job you already have there. Create is when you have a new job. This 1.2 billion will retain or create 130 jobs. That's the reality. The rest is political hype. And that has been the same story of everything else. Mr. Trump does not have the power or is unwilling to try to use the power. He has to really force matters in terms of jobs. So he has retreated more and more to manufacturing out of nothing the jobs that his administration promised but can't in fact compel the corporations to deliver. Okay, here's another example of a shift in America. A week or two ago, the city of Seattle in Washington, the City Council of Seattle voted unanimously to create a 15 member board which will begin meeting this summer to talk about pushing laws that will help renters in Seattle. Yes, a renters commission, which will not have on it homeowners. It will not have on it landlords. That's right. It's an attempt to give some official clout to renters, a part of our economy that is huge. In many cities, more than half the people who live there are renters. In virtually all cities, renters are a very significant part of the population. But typically their voices are barely heard by the mayor, by the city council, by the politicians. And the reasons for that are not hard to find. Renters are the lowest income. If you have more income, you Tend to buy your own home. And if you're really well off, you can buy a home that you rent to others. That makes you a landlord. Those folks, the homeowners, have ways of getting together and putting pressure on City Hall. The landlords are even better at that. They have the most money, they pool that money, they create lobbyists and pressure groups. They pay for advertising. In short, the laws all over the United States favor landlords and secondarily homeowners at the expense of renters. Of course, occasionally renters can mobilize, but it takes a lot of work by people who have full time jobs and very little extra money, which is why even when they're successful, it doesn't last, given the overwhelming preponderance of wealthy pressure coming from homeowners and from landlords. So they've taken an interesting tack in Seattle. You're beginning to see this kind of fighting back against long standing injustices that, and in the case of Seattle, there's now going to be a commission fought, by the way the landlords fought it. Then they demanded to have seats on it, they failed. They couldn't prevent it and they couldn't get any seats on it. So you're going to see for the first time that the pressures and organizations and lobbies of the landlords have to deal with another expression, an organized, mobilized expression of, of renters interests. And it's going to change the city of Seattle, which was discovery that because of high income people wanting to live in Seattle, because of new uses for apartments such as Airbnb, which take over apartments that might otherwise have been rented out to people who are permanent residents, etc. That rents have been going up and that the other unaffordability of rental housing is hurting large numbers of people and they are going to do something about it. And the renters now have a focus for their concerns. Very interesting development. Very few cities in the United States have anything like that. And it's my hope that by making it clear to you that this is an important breakthrough, that other cities may begin to see the, the need for doing that. Next item. The Secretary and I won't make much comment because none is really necessary. The new Secretary of Education in The United States, Mrs. DeVos, has made a new ruling. And I want you all to know, and particularly those of you who may be students, or those of you who may be parents, friends and so forth of students under her new rule, designed, as she said, to help make America great again, she now will allow what the Obama administration had disallowed she will allow a penalty to be assessed on students who default on their college loans. This penalty in the past could not be assessed if the student found a way to make up the payment within two months of defaulting. Mrs. DeVos has decided not to allow two months. In other words, to enable the lender, the bank, or the lender who provides money for a student loan to assess a penalty equal up to 16% of the outstanding loan on a student who defaults, even if that student can make it up, make the payment within two months of defaulting. No two month allowance. This, in an age of growing difficulty for students, is a contribution clearly to making America great again, so that the bankers and the lenders can hit the students up for 16% for defaulting and not paying it back, even if it's paid back within two months. As I said, no further comment from me is needed. All right, last one that we may have some time for. It's a topic I haven't talked about much on this program, but I want to address now. There is a case coming up to the Supreme Court. It's called Villarreal versus R.J. reynolds Tobacco Company. Villarreal is the name of a person who worked for. His name is Richard Villarreal, who worked for many years for the R.J. reynolds Tobacco Company. He applied for a job, a better job, sales job, online, and was refused. He applied actually several times and was refused, according to the news reports. And he didn't think much of it until there was a whistleblower, a person inside RJ Reynolds who announced that they were discriminating against people who were older than a certain age, and that Mr. Villarreal began to believe that he might have been a victim of that, which it turns out he feels he was. It is illegal in the United States to practice age discrimination. It has been for decades. You are not allowed by law to deny a person an opportunity or a job on grounds of his or her age. You can decide it on grounds of their capability, their competence, their performance, but not their age. No age discrimination. But here clearly was an example in the minds of Richard Villarreal, and, and so he went to court and it's going all the way to the Supreme Court. The defense of R.J. reynolds is remarkable. Their defense is that he didn't pursue the denial of a job from his online application. So he didn't really suffer. He didn't really care about this until someone announced that RJ Reynolds was doing something they shouldn't do. I'm no lawyer, but sounds like a Strange defense that doesn't get at the issue. And their other defense was that this law should only apply to people already working. And it turns out when I checked my statistics and my information that Mr. Villal wasn't already working. He was just applying for a sales position with R.J. reynolds. And since he was only applying but not yet already working, well, then apparently RJ Reynolds thinks age discrimination is okay. This is worrisome because it deals with the letter of the details, not with the spirit of the law. They are discriminating on the grounds of age. How many Americans are discriminated against when there isn't a whistleblower and no one catches them? We will not know. Very last item and then I have to stop for the short updates of this time. Latest information from Bloomberg is that we're coming on to a crisis of subprime loans. But this time it isn't subprime loans to homeowners. That's what crashed the economy in 2008. No, the latest statistics indicate that we are now heading right into a subprime auto loan crisis. Turns out the boom in automobiles in recent years was overwhelmingly fueled by loans and an increasing portion of loans to people with bad credit histories who are not able to pay. To give you an example of what is going on, these people are now unable to maintain their payments. Their cars are being taken away from them. The impact on their lives is catastrophic. The market in selling off used cars is collapsing. It is making people who depend on selling used cars. For example, the Hertz Rent a Car Corporation has its stock in the floor because it depends on selling those rental cars into a market now where they can't get the prices they expected. The damage is beginning to mount. And it does leave you with this sense. Very little was learned by our great banking community in the last crash and they're busy gearing up for the next one. We've come to the end of the first half of this program. This is Richard Wolff. This is Economic Update. Stay with us. We'll be right back.
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Ah, she's impatient cuz she wants an album so it showed by the T Don't find her she's united when it strangles everything oh, she's looking through the room she's looking through the room.
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Welcome back, friends, to the second half of Economic Update for this week. Once again, I'm your host, Richard Wolff. I'm a professor of economics. I've been that all my life. And it is a pleasure for me to bring these programs to you every week. And in this second half, I'm going to be devoting myself to some major conversations, some major discussions of really big issues that affect us now. It's a little different from the first half, where we do short, punchier kinds of updates of recent events. Let me start with immigration. It's an enormous issue. It was in the election campaign here in the United States. It continues to be, and it will no doubt flare up in the months and years ahead. And it is likewise an enormous, important issue in England, having to do with the leaving of England from the European Union. It is the major issue in recent elections in Holland, in elections in the next couple of weeks in France, and so on. I want to deal with the economics of immigration in a particular way. Opponents of immigration have argued that immigrants draw on the public services, say here in the United States, of all kinds, without making a contribution to pay for them. In other words, they are beneficiaries of public services of all kinds, but do not help to pay for them and therefore are a burden on the rest of the population. It's a parallel argument you'll often hear to the notion that immigrants are people who displace native citizens from jobs and are therefore a burden in terms of job availability for folks who are not immigrants. I want to focus on the first of those two. I want to talk about immigrants drawing on public services versus contributing to pay for them. I do that not as an advocate for or against immigration. That's not my issue here. But if we're going to have a conversation about immigration and the economics of it, which these two big arguments against immigration are economic arguments, well, then it is necessary, just in the interest of simple fairness and truth, to talk about both sides of the ledger. How do immigrants in fact help pay for public services, which I will show you now. They do, and quite generously so. Let's begin. The most important tax for most people is not what you might think. It's not the income tax, the money held out of your weekly check. There are immigrants who have that withheld just like everybody else and pay that tax. There are undocumented immigrants who work under the table who don't have that money withheld. And often it means that they're not even paid what they're supposed to because the employer can get away with it. They're undocumented, they're insecure. They can't really go to the police or anywhere else to complain about being ill paid unpaid because they are in a dangerous place not having the documents they need. But that too is not my major Concern, most people pay most of their taxes not in the form of an income tax, but in the form of other kinds of taxes. And their immigrants, whether they're documented or not, pay and pay a lot. Let me give you just a few sales taxes, that little addition. When you buy something in a clothing store or a department store or virtually anywhere, depending on where you live, sales taxes apply to most, if not all, objects that you buy in a store. The immigrant pays that tax just as well as everybody else. Otherwise, the immigrant doesn't get the article, whether it's a piece of clothing or a piece of equipment or whatever it is. So immigrants are paying loads of money in sales taxes. You might have understood that, but let's continue. Immigrants also pay excise taxes. The federal government puts a very hefty excise tax on things like cigarette products, gasoline, motor oil and gasoline and alcoholic beverages. Immigrants who smoke or drink or drive anywhere and buy gas are paying excise taxes to Uncle Sam all the time. But here comes the even bigger ones. Everyone who studies immigration knows what the pattern is, because it's been the pattern in the United States for 100 or more years. We have in all American cities, or almost all of them. Neighborhoods that we all recognize are in bad shape, are suffering, have poorly maintained housing, poorly maintained streets. You know the pattern. You can call them downtrodden, you can call them slums in. It doesn't really matter. They are neighborhoods filled with residential housing, sometimes big apartment buildings, sometimes low. But this is housing where there aren't enough people to live there. They're dilapidated. For that reason, the landlords don't maintain those buildings very well, in part because they don't have tenants for the apartments. Either There aren't the folks there to do it, or the folks who might want to live there don't have the money to do it. These neighborhoods deteriorate, and when they deteriorate, the following always landlords begin to miss their tax payments. They don't pay taxes on these buildings and on the land that these buildings sit on, because they're not earning income, because they don't have tenants able and willing to live and pay rent. There. Keep that now in your mind. In comes a wave of immigration, let's say in the last 30 years or so, a wave of immigration, mostly from Central and Southern America, our neighbors to the South. The people who come here are not all, but overwhelmingly poor. They are running away from political conflict, from war, and from economic distress, poverty. They arrive at an American city with very little more than the clothes on their back and whatever they can carry in a dilapidated suitcase. Where do they go? Well, we all know, and you know too, they go and look for jobs. And the jobs they get are the bottom of the pile. They work in the car wash, they work at the back of the restaurant, they work in the hospital doing the most menial work. They do the work in the fields picking the crop. You all know, just like I do, just like all Americans do. And here's what else we all they crowd together because they don't have much money. And you know where they crowd together? In the poorest, most rundown areas of the city where the rents are the lowest because the houses have been neglected and the landlords haven't kept the them up. You get the picture. But now here comes the economics lesson. It's precisely because the immigrants do that crowd too many people in so they can pool the little bit of money each of them earns to pay the landlord to have a roof over their head. And it's because immigrants come and fill those dilapidated buildings in that poor part of town that the landlords begin to halve the rental income that enables them to pay taxes. That's right. The biggest expense of most immigrants is housing. And a big portion of the money they pay for housing is simply enabling the landlord to whom they pay that money to to pay his taxes. A landlord will tell you the rents I charge are needed by me to cover the cost of the housing. That includes the taxes I have to pay. Well then, let's give credit where credit is due. The occupation of sometimes huge portions of cities by immigrants paying rent enables those landlords to pay their taxes. And if the city doesn't get that money from those landlords who get it from those immigrants, then the city can't maintain the public schools, the city can't maintain the roads, the public parks, help at the hospital. You get the picture. We all benefit who live in American cities from the enormous contribution made by large populations of immigrants in maintaining rental income and thereby the tax portion of rental income. The next time you think about expelling immigrants, try to think about this problem. Here's where you might have thought about it in the last three years. Over the last few years, the Obama administration deported many such immigrants, millions of them. They therefore lost their apartments. They stopped paying rent because they weren't in the country anymore. Landlords now suffered, emptying out buildings they couldn't collect rents from immigrants that the Obama administration had deported. And so those landlords stopped paying their taxes. Many of them abandoned the buildings which then deteriorated in ways they would not have otherwise, destroying those neighborhoods, becoming fire hazards, you name it. We all suffered because of the economic consequences of expelling immigrants. And if you want to weigh the costs and benefits of immigration, the very least you have to do, if you're honestly engaged in the subject, is weigh the costs. And there are costs against the benefits, and there are plenty of those. Otherwise you're not having a conversation and you're not fairly assessing a situation. What you're doing is making immigrants a scapegoat for other social problems, which is what my opinion is what we see going on. We have an economy that isn't working well for the majority of American people. And rather than have us as a nation face that fact, talk about an economic system that makes billionaires out of the few, even the few that want to pay more taxes, are not allowed to do it. That damages the middle and really hurts the mass of the poor poor. But instead of talking about a system that works like that, which is what we should be doing, we scapegoat immigrants, as if kicking out another 2 or 3 million is going to make a big difference. Kicking out the last 2 or 3 million wrecked their lives. It did not solve the economic problems of the United States, nor will doing more of it have any better effect. And one of the reasons is all of the economic costs we pay. If we don't have these waves of immigration that has sustained the United States for most of its history, we reverse all of that. There is a heavy economic price to pay, whatever the gains in fewer people using public services, there are losses in having fewer people contribute. The sales taxes, the excise taxes, the rental payments that pay, the property taxes that landlords have, these are things that have to be faced if you're serious about the issue. Next, we talk often on this program and I'm going to do it again about worker co ops as an alternative to the typical capitalist corporation. Once again, just to remind everyone, the typical capitalist corporation has a tiny group of people who make all the decisions. Those people are called major shareholders, the people who own the shares of any sizable company, or if it isn't that kind of a company, the family or whoever, who are the owners and the owners, whether they're shareholders or some family, choose the top directors of the company. In a corporation, it's called the board of directors. The way that works in the United States and in most other countries is the once a year the shareholders elect the board of directors. Board of directors typically have 12 to 20 people who sit on Them and they have to be elected. And the way it works is you get a vote according to how many shares of the company you were rich enough to. So if you own no shares, you get no votes. The majority of workers in most factories don't have any shares. They therefore have no votes. If a worker in a factory has some shares, there are a handful. The big blocks of shares are owned by the wealthy in the United States. So you might like to know that 1% of shareholders own about two thirds of the shares. There's your 1%. So the 1% who have like say a million shares each get a million votes. You whose your grandmother left you 11 shares, you get 11 votes. You get the picture. So the board of directors responds to and is chosen by the major shareholders. That's it. Major shareholders, a dozen folks, board of directors, another dozen folks. You got 25, 30 people. They make all the key decisions. They decide what the company produces, where the company produces, how, what technology the company uses, and what's done with the profits. Everybody works there, all the employees who could be 1,000, could be 10,000, could be 100,000. But it's a tiny group of people who make all the key decisions, including what's done with the profits, that all the workers help to produce. A worker co op is different. It's a democratically organized enterprise. What does that mean? It's very simple. All the workers in an enterprise, whatever they do, one person, one vote. They decide together what the company will produce, where it will produce, what technology it will use, and how to use the profits that they all helped to produce. It's a democratic enterprise, something which a capitalist enterprise never has been and is not today. And however difficult that may be to face it is the only reality we have. And to not face it isn't a smart move either. So let's continue. Last time I talked about issues that arise in distributing profits. How a worker co op would of course never distribute its profits the way a capitalist corporation does. Just to remind you, capitalist corporations distribute the bulk of their profits. What's left over after they manage the business to themselves, which should come as no surprise to you, they give their top managers wild salaries much, much higher than what average workers get. And they pay out a huge portion of their profits, typically to their shareholders. Not surprisingly, since the shareholders and the top execs are the decision makers, and they give it to themselves. Obviously in a worker co op wouldn't work like that because you have a democratic decision. The profits would be much more. Here we go. Equally Distributed, not the same amount to each person, but nothing like the inequality that makes a few executives have more money than they know what to do with and the mass of people worrying about how to pay the basic bills of a week's life. But I want to go on to other examples. I want to use the example of location. You might think it's simple, but it isn't. Where do we produce something? A software program, a piece of machinery, a product of cleaning things? It doesn't really matter where. Over the last 40 years, a growing number of capitalist enterprises have made the decision to move production from locations in the United States to locations elsewhere, and in particular to locations in Asia, but all over the world. A variety of factors led them to make these decisions, but by far the most important one was wages. They could get the work done in China or India or Brazil or wherever by paying much less per hour to a worker than they had had to pay here in the United States. They saw more profit, and so they made the decision. Why? Because it was good for them to do it. It made more profits. It got the work done. Producing whatever they were producing by paying workers a much lower amount of money. So when they sold the product, they had to give less of the revenue they got from selling the product to the workers because the workers got lower wages. That left more for them, higher profits, no brainer. Very simple. That's why it's been going on. That's why so many factories are empty. That's why so many towns are in trouble. Because the jobs they once saw have moved to Mexico, to wherever. All right, now let's go to a worker co op. Worker co op is informed. Hey, we could close this factory and move somewhere else. But you don't need me to tell you that's not going to happen, is it? It's not going to happen. Because the workers in a place, if they had a democratic decision, would never destroy their own jobs, would never deprive the community where they live of the tax revenue from a business in that community which pays for the schools and the parks and all the rest of what they enjoy as part of their lives. No, no, the workers, if they made the decision, would keep the business here. Well, you say how could they then compete with other companies from other parts of the world? Well, actually, there's lots of answers to that question. They could compete by passing laws that give them an advantage, that make it difficult for other people to ship cheap stuff here. If it is made by exploiting workers at very low wages. Might be an interesting argument has been used in the past. There are other ways to accommodate. Also, you can be more efficient in a variety of ways that a worker co op can do. A worker co op typically has people who are very interested in managing their own affairs. They don't like supervisors that much. They don't need multiple layers of administrators and they don't want them. Workers will take care of the business themselves if it's their business and if it's in their interest to do so. And they won't need a lot of supervision. And the money saved on supervision gives a worker co op a competitive advantage over a capitalist who needs many layers of supervision because the workers know that they're working for him and not for themselves. Turns out worker co ops have no problem competing against capitalist enterprises. So it is viable. And you know something else? Worker co ops might also have the following idea. I'm going to use the clothing industry as an example. When the manufacturers, the capitalists who made clothing here in the United States decided to shut down the mills here, to shut down the textile factories and the clothing factories and open them up in China and Bangladesh and Mexico and Haiti and wherever they went, once again, they did it to save money and to make more profits. But it had a side effect that workers in a worker co op might be concerned about. If you produce clothing in China, as much of it is, it means you have to ship the clothing 10,000 miles across the ocean in freighters. Those freighters pollute the ocean and they pollute the air. The pollution is not a problem for the capitalists because no one charges them for that. They make their profits because they their wages are so low in those parts of the world, they can pay the freight to ship the stuff back. But we, the people, the mass of people organized in worker co ops, we live with the polluted ocean that can't sustain the fish population. We live with the polluted air and all that it does to our climate. Worker co ops wouldn't allow that to happen and we wouldn't have that pollution, would we? Will you put it all together in it turns out that if worker co ops had made the decision in the last 40 years, we wouldn't be looking at the decimated landscape that we have. We wouldn't be looking at the level of pollution that threatens us. We would have had different decisions about our economy and our ecology and much else. Let me use another example that talks about this ecology. You know, a capitalist company hears about a new machine, it pollutes the air, pollutes the water, it's terrible. But the executives of the company say it increases our profits. What do we care that it destroys the environment? It's not our problem. We have to make more money because otherwise we won't succeed. That's what we're paid for. We're the executives. We make the decisions. Besides which, we live in a gated community 40 miles from the factory. We don't have to breathe that air there. We don't have to worry about the water. We have filtered water in our bathrooms. So they make the decision to use a bad technology and they say to their workers, you know, you're free to leave. You don't like to breathe this air, go someplace else. It's not my problem. Now suppose a worker co op had to make the same decision. They heard about a new machine and the new machine makes it more profitable to do the business. They'd be interested in that being more profitable. But they would also have to weigh what the pollution of the air and the water. Because it's the pollution. They will live with that. Their husband or wife will live with that, their children will live with that, their relatives and neighbors and friends and their community. And they're going to weigh that in a way that a capitalist board of directors never would, never did. Guess what? Having worker co ops gives you a much more solid basis for making practical decisions in a business that will not cause environmental damage compared to what you get with a capitalistically organized enterprise. See, it turns out that worker co ops have all kinds of advantages relative to capitalistically organized enterprises. Which is a fundamental reason why, if you think about it, an economy like ours ought to give people at least the choice. Let's have a large worker co op sector of the American economy. Everywhere in America there should be, let's say, competing capitalist and worker co op enterprises. You already have that in Spain in a big way. You already have it in Italy in a big way. So we have plenty of models to use. No problem. This is not new. This is old. It's only new in America where we're waking up to catching up with what others have understood. If we had a worker co op sector, we could see about the environmental impact of that kind of enterprise versus the capitalist. We could see about losing jobs in one system versus another. Americans would actually have, for the first time, freedom of choice. Choose to buy from a capitalist versus a worker co op enterprise. Choose to work in a top down hierarchical capitalist enterprise or, or a democratic worker enterprise. That choice we don't have. We could, but we don't have it. Think about it, folks, because as the capitalist economy is having the kinds of troubles we talked about at the beginning of this program, looking for alternatives for which the worker co op is the number one contender right now is more important than than ever. Thank you so much for spending your time with me. This is Richard Wolff for Economic Update. I want to thank all of you that are partners with us, that tell others about this program, that share what you've learned here with others. That's why we do it. I want to thank our longtime partner, Truthout.org, a remarkable independent source of news and analysis. You can check out on the Internet anytime. Stay with us in the weeks to come. I look forward with talking with you again.
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