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Sam. Sa. 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 of our children, their looming economic realities. I'm your host, Richard Wolff. I've been a professor of economics all my adult life. I currently teach at the New School University in New York City. Before jumping into today's program, I wanted to thank basically the very kind people of California. I just came back from a trip in which I spoke in Los Angeles, in Berkeley, and in Sonoma, south and north of California. The audiences were the largest I've had so far in a growing program of public speaking. I want to thank particularly my hosts, Occidental College in Los Angeles, The Armenian Society, KPFK, the station that carries my program, L.A. progressive, the ACLU of Southern California. They sponsored my speaking in Los Angeles. They brought the crowds. And I must say it was not just the quantity of people who came, very gratifying, but also the spirit, the intense engagement with what we have to say, the sense of a historic change time in America that made this an extraordinary experience. I then moved on and spoke in what I believe is the largest church in Berkeley, California, the First Congregational Church. And there the crowd was even larger. And the organizer was kpfa, the very important public radio station in the Bay Area. And finally at Vintage House in Sonoma, again, the largest crowd I've seen there and again a remarkable spirit, as it was in Berkeley, as it was in Los Angeles. So thank you to the people of California who came out and thank you to the hosts. This is a very, very gratifying time and I wanted to tell everyone since it's a sign of which way much of the wind is now blowing and it's a very, very, very good time to be doing what I do. I also want to apologize to many of you sending us emails. It's now a flood, to be honest, and we simply can't respond to all of them in the way that I tried to in the past. There are simply too many of you. Your questions are excellent. We read every one. We will use it to shape the program. But please bear with us if we can't give you the individual answers that your communications deserve. But we simply don't have the staff, at least not yet, to handle it. All right, let's jump now in to today's updates. The first one has to do with the revising of America's and other countries growth prospects in 2016 and 17. The OECD, that important source of economic analysis and statistics that I refer to quite often has just revised in February of 2016, just revised its estimates of economic growth. And growth is slowing in the United States, in Europe, in Brazil, and elsewhere around the world, even compared to last November. The OECD is reducing its estimates of likely growth. This is going to translate into economic difficulties. And everyone should be aware that that's the prognosis that that the folks who keep records now have for the United States as well as other major countries. Next update. Well, this has to do with Michael Bloomberg. According to Forbes Magazine, Michael Bloomberg's personal wealth is measured at $38.5 billion. He used this extraordinary wealth to buy for himself the mayor's position in New York City, not only for the two terms legally available to him, but he was even able to get the city council to give him a third and unprecedented and at that point, not quite legal term as New York's mayor. This apparently was so exciting and so gratifying that he has now told the Financial Times that he is considering entering the presidential race here in the United States. He is apparently not satisfied with any of the candidates, left or right, Republican or Democrat. And he's told the Financial Times he's prepared to spend ready $1 billion. Now, of course, for him, this is 3% or less of what it is he owns. So it will not affect his colossal wealth, but it will immediately propel him into the man spending the most. And this seems to be the recipe for what buys political power in the United States today. Please notice that in the past, politicians felt the need to go to the rich people for the money required to win. Apparently, the rich people don't want that system anymore. They just want to avoid the middleman and go right in and get it themselves. So be it. You need to know it. There are now a growing number of countries that are seeing their central banks. That's the institution in other countries that runs the monetary system. It's the equivalent there of what we here call the Federal Reserve. They are now moving more and more to negative interest rates. Switzerland has it. Denmark has it. Sweden recently added it. The European Central bank has it. It may well be coming to the United States as well. Why is this happening and what does it mean? A negative interest rate means that if you put a deposit into an institution that pays you a negative interest rate at the end of the year, you will get back less than the money you put in. So it's the opposite of a positive interest rate. In a positive interest rate, you put the money in the principal and you get it back at the end of a period of time with an additional amount called interest. Negative interest means that amount is deducted from your principal. You get back less than you gave. Why is this done? The answer is that the efforts of banks to flood the global economy with money, liquidity with money with the ability to spend was supposed to get us out of the negative consequences of the collapse of 2008. We were all supposed to recover our economies. Well, it hasn't worked out, despite the immense amount of money pumped into the economy. And one of the reasons is that money was not used to lend to individuals or businesses because both individuals and businesses saw the economic prospects of as poor. And so they weren't willing to borrow. So the money just accumulated in the banks or was used to play on stock markets, driving up those prices, but not creating product, not creating jobs. None of the things it was supposed to do that would justify ways of justifying giving all that money to all those banks. So now the monetary authorities have no alternative but literally to try to force the banks into lending to the public by telling them, if you don't, if you keep your money with us, the central bank, we'll actually decline giving you any interest rate and take money from you to give you the privilege of holding it with us. It's a sign, in short, of desperation. Another purpose of negative interest rates is to make it so unattractive to keep money in your country that your people and anybody else will not want to hold your currency. They will want to get rid of your currency, say the Swiss franc or the Swedish currency or any other, to go somewhere else where they can still get positive interest for holding money and that will depress the value of your currency and that will make it cheaper for other people to buy your product. So in short, a negative interest rate is a way to try to boost your exports. It's another sign of a desperate government policy trying to cope with a capitalist downturn without touching the capitalists who are at the root of the problem, but who are untouchable so long as the status quo remains. Big in the news this last week, and you notice I'm being quicker and shorter with updates because we have so many, frankly. In the news was an agreement by Saudi Arabia and Russia to try to stop the collapse of oil prices by freezing, at least not increasing, the amount of oil they dump on the world market. It gave at least a temporary boost to oil prices. They went up a bit. Their agreement is contingent, dependent on other major oil producers and Sellersiraq, Iran, Nigeria, The United States and so on, going along with all of this. And that's a very, very big if, so we shall see. But it is a sign when two enemies, Russia and Saudi Arabia, who literally are at war in Syria and elsewhere through their proxies, when they get together to work something out, you know how desperate they both must be. And there's every sign that the falling oil price is a disaster for both their economies because they depend on it. The lesson here that nobody should miss is that a tiny number of big oil companies and politicians sitting at at the peak of a few societies are making decisions that determine the energy availability and the energy price and indeed all prices around the world. Since energy is an input to producing everything else, the ability of these folks to set the price, a tiny number of people who could fit in an auditorium for the entire 7 billion of us on this planet, is an exercise in the opposite of democracy that is stupefying. Petroleum is a public resource. It comes from the earth. Nobody put it there. These folks have no claim to have created it. It is outrageous to have this dependence on, of the mass of people, on a tiny, undemocratically accountable elite who make these decisions, usually in the fanciest hotels in the fanciest centers of the world, and of course to suit their needs above all else. Next update. This has to do with Puerto Rico. And I speak about it not only because Puerto Rico deserves the attention of decent people around the world, but because it is a revelation of an economy that doesn't work, or to put it otherwise, that works in such a way that any minimal decency would have to rebel. Puerto Rico's government, a government no more democratic than that in any other part of the United States, which is to say not very democratic at all, borrowed a great deal of money to finance its rule in Puerto Rico over the recent decades. 72 billion is the current estimate. And it turns out, being the poorest part of the United States, that they now cannot pay back the debts they ran up. And when the elites who contract the debt find it impossible to keep the game going, the game of themselves in power, financed by borrowed money, when they can't anymore, they try to make the population underneath them carry the burden. Wow. And how is it being done in Puerto Rico? On July 1st of 2015, the Puerto Rican government, in an attempt to manage its debts, an attempt by the way, that is not working, but Nonetheless, back on July 1st of the last year, they raised the sales tax. It's called there a sales and a use tax, but it's basically a sales tax from 7% already among the highest of the 50 states. In comparison to the 50 states, they raised it to 11 and a half percent sales tax. You heard me right. I want to drive it home. The poorest part of this United States pays a sales tax of 11 and a half percent. That's a tax on top of the price of something you buy. The sales tax is widely understood as a regressive tax. It falls most heavily on those who can least afford it. There's nothing progressive about it. Not like an income tax where the rate rises because the higher your income. No, the sales tax in Puerto Rico is the same whether you are a very poor unemployed person or you're Rockefeller, or maybe I should say Bloomberg visiting. You all pay the same 11.5% of the price of what you buy. The poorest part of the country pays the highest sales tax. What justification for that could exist that isn't repugnant? Next item. There are a growing number of companies driving home the point here in the United States that the movement of jobs out of the United States to other countries is continuing. It's been going on since the 1970s at a hefty clip, and there's no end in sight. Even though millions of jobs have already disappeared, they're continuing. And in this last week, there were three companies announcing the movement of jobs out of the United States and in this case, to Mexico. And I wanted to mention them and make a comment about them. The first, and perhaps the one that got the most attention is the Carrier Corporation, well known for making air conditioners and other pieces of equipment. That's actually a subsidiary of something called the United Technologies Corporation, a company going through all kinds of changes these days. They recently sold their Sikorsky helicopter division and they are busily making profits, or rather, in the words of their CEO, more profits. And in this case, they're moving to Mexico. The fact that they've gotten subsidies over the years, including recently from various governments in the United States, didn't seem to hamper them. They didn't see any obligation connected to getting subsidies, which they've always done from American governments at all levels and leaving the United States for making more money in Mexico. But they were not alone. Here are two other companies that announced or made moves recently to Mexico. I just add them so you can see this is a wave, not an isolated event. The Ford Motor Company, right after signing an agreement with the United Auto Workers to get through a possible strike, promising all kinds of good things, is now showing its other hand which is moving jobs to Mexico and the one that caught my eye because of its, I don't know, nostalgic value, the Nabisco Corporation announced that it is moving the production of Oreo cookies to Mexico. There's no comment I could think of suitable to what that suggests. I leave it to your imagination. One commentator, however, pointed out that this raises questions about the ethics of big corporations abandoning the United States in order to make higher profits by giving the work to to lower waged foreign workers. My response is this has got nothing to do with ethics, which is what the businesses themselves would tell you. This is about profits. This is about how capitalism works. The job of the leaders of capitalist corporations is to maximize their profits and they do that in whatever way is available to them. Moving to Mexico is available because the United States government doesn't stop it, because the working class in this country doesn't stop it, because the workers and government of Mexico neither stop it nor stop creating incentives for corporations to do it and therefore they go in that direction. You don't want this to happen, you got to change the system. Appealing to the ethics of corporate executives strikes me as bizarre as well as ineffective. Next, the new head of the Minneapolis Federal Reserve, Neel Kashkari, shocked the financial world this last week by proposing that there are indeed major banks in the United States that are too big to fail and therefore should be broken up into smaller banks or made into, and this is his term, public utilities operated and perhaps even owned by the government because they have to be made accountable. In the words of this former Goldman Sachs executive, Neel Kashkari was here's his we know markets make mistakes. Interesting because so many right wing commentators seem to be unable to see his point. But that should not be allowed to endanger an entire economy. Wow. Some people think only Bernie Sanders wants to break up the banks, but no, even some of the biggest insiders of the banking industry understand that the way things are now are socially dangerous to permit to continue. I'll come back to that later on in this program. Next item. Apple Corporation announced this last week that something remarkable, it went into the financial markets and borrowed $12 billion. And before they're done it may be up to 15 or $20 billion. And that caught my eye because I wondered to myself, wow, they're borrowing 12 to 20 billion dollars. I know, because the financial press is full of it, that Apple currently is sitting on ready $216 billion of cash. So your question, like mine would be why is a company sitting on 216 billion in cash that it owns outright. Why is it borrowing a trivial 12 to 20 on top of it? The answer is that Apple owns the 216 billion outside the United States, so it can't bring it into the United States and use it here without paying taxes. Because in the bizarre law of the United States, these companies can keep their money abroad and avoid paying taxes to to Uncle Sam on all that they've earned abroad, even if much of it is traceable to all kinds of work done in and by American citizens. Well, here's what it turns out. Apple wanted to do. It wanted to return money to its shareholders. It wanted to buy back outstanding shares of Apple, giving the share owners cash. So in order to give its own shareholders cash, it borrowed money because it can't bring the money home. So let's review 12 to 20 billion dollars which were loaned by lenders which might in another world have gone to create jobs, gone to build capacity, gone to produce useful things. No, no, no, no, no. The lenders instead lent it to the Apple Corporation which turned around and bought shares. That's not producing anything. That's how capitalism works. And if it strikes you as crazy, good, then you understand pretty clearly what's happening. Okay, let me turn then, in the time that we have quickly, to a question that many of you have sent to me. You've understood that we advocate here a fundamental economic change from a system dominated by corporations that are fundamentally undemocratic because a tiny group of people at the top, major shareholders and the board of directors that they select make all the decisions what, how and where to produce and what to do with the profits. And that a much better, much more democratic system would be one in which enterprises were organized as worker co ops, where all the workers together had an equal voice in making those decisions and coordinated them with the local residential communities in a genuinely economic and political democracy. But many of you have asked me, even if you find that image attractive, that idea interesting, how could it be done? How could we ever achieve it? And I wanted to answer that question because it's on so many of your minds. First, this is not a question about something that might, could, should, would happen in the future. This is already happening. I work with law firms and others who are busy and have been for years doing what are called conversions, converting a top down, hierarchical, undemocratic capitalist enterprise into a democratic worker cooperative. That's right. It's been going on. There are laws that enable it, there are accounting mechanisms to handle it, and there are banks who will lend money to enable it to be done. So all the parts are there and that's why it's already happening. It's really important that we all understand that this is not some pie in the sky fantasy utopian dream. But it's already a reality both in the United States and in many other countries. And it's been going on for a long time. If you hadn't heard about it. That's because it represents a challenge and an alternative to capitalism. And that, of course, keeps it under wraps. How could it be furthered? The answer is easy. All around the country there are firms, often run by mom and pop or small groups, who've spent a lifetime building up an enterprise. Now they're retired, they're old, their children don't want to carry the business on, they don't want to close it down, and they don't want to sell it to a big corporation. They'd be interested in selling it to their workers for fine. Their workers would often be interested in running it as a co op. All of this can be arranged by the people who've been doing it already for a long time. So if you're interested, get in touch with us through our websites. You know what they rdwolff with two Fs.com and democracyatwork.info and we will connect you up. It can be done. It should be done. It has been happening and therefore nobody should wonder whether it's doable. We've come to the end of the first half of our program. I've added extra updates. I've been a little bit brief with them because so much is happening that I think you need to know. Please stay with us. We will be back in a very short time with the second half of this program and the longer in depth discussions that we have scheduled for that second half. How many roads must a man walk down before you call him a man? How many seas must the white dove sail before she sleeps in the sand isn't how many times my the cannonballs fly before they forever band? The answer, my friend, is blowing in the wind. The answer is blowing in the wind. Yes, and how many years can a mountain exist before it is washed to the sea? Yes, and how many years can some people exist before they're allowed to be free? Yes, and how many times can a man turn his head and pretend that he just doesn't see? Welcome back, friends, to the second half of Economic Update for February 2016. Before jumping into the major discussions for the second half of our program today, I wanted to Remind you, as I often do, of the benefits from the two websites that we maintain that I would like to invite you to make use of. Indeed, I would like you to make use of the websites as of this program and share them with people you know who might be interested. After all, you are a partner of this program. Presumably, if you listen, you find what we do here interesting, provocative, informative. We certainly try to make it that way, but we need your help to get the word out to make this program known to other people, both as a program they can listen to, but likewise in terms of anything you hear here that you think others could benefit from knowing about. So please use your social media connections, talk to your friends, your co workers, and so on. That is a way of making this program have the social impact that it deserves in our judgment and that we work so hard to make functional as part of our job. The two websites are the following. First rdwolff with two f's w o l f f rdwolf.com very simple. The other one is democracy at work, all one word, democracyatwork.info I n f o. They're both available 24 7. There's absolutely no charge whatsoever to make use of all of the items there. The written work, the audio files, the video files, the lectures, the entire classes, the news items that are posted. We do a great deal of work updating these websites all the time. And also the websites allow you to follow us on Facebook and Twitter, keep up with our work again on a daily basis when we put materials out in those forms. Both websites also enable you to communicate directly to us. Your questions, your comments, your criticisms. I guarantee you we read every single one. And we try to adjust and design the program to meet what you tell us you want. So thank you, because I don't do that enough. For your interest, for listening, for. For sharing what we do, I want to thank also our partner, truthout.org that remarkable independent source of news and analysis, and that we urge you to check out truthout.org they carry my work. They carry a whole host of works by all kinds of authors that you will find very, very useful. Okay, the big discussion for today, the major one, has to do with the three fundamentally different approaches to capitalism as a system. We now are in a situation in the United States and indeed around the world, where the capitalist system is coming into more and more questioning. It's actually reminiscent of earlier times in the history of capitalism, or when it likewise came into question, when its critics found it easier and easier to point to its flaws, its weaknesses, its injustices, and to appeal to growing audiences who share that assessment of a system that is either badly in need of change or in need of being superseded by a different and better system. System. But in our time now, perhaps the challenge is the most profound. In any case, whatever the depth of the challenge, it is a mounting challenge. The number of people, for example, in Great Britain who came out to create the opportunity for Jeremy Corbyn to become the leader of the Labour Party is a sign of discontent with capitalism. Exactly the same applies to the candidacy of Bernie Sanders in the United States. Likewise, it applies to the dramatic changes in who governs Greece, in who's currently governing Portugal, and in many other changes around the world. Capitalism is in trouble. Capitalism is accused of fomenting a level of inequality that we really haven't seen for centuries. It's likewise highly unstable, as demonstrated by the collapse in 2008 and the very fact pointed out at the beginning of this program that the economic prospects for 2016 and 17 are likewise poor. So it's unstable, it's unequal, and it's also unjust in ways that are staggering. Once again, in the first half of this program, I had to point out that the poorest part of the United States, Puerto rico, pays an 11.5% sales tax, unheard of anywhere else in the United States. The poorest pay the highest sales tax. What logic or justification is there for such an absurdity? And in the same breath, we hear that one of the hundred richest people in the United States is considering buying, excuse me, running for president, Mr. Bloomberg. This is a sign of inequality on a staggering dimension. Well, then, what are the ways of dealing with capitalism's problem? Basically, there are three, and wherever anybody falls, or any movement falls, it falls somewhere along the continuum of these three. So I want to go over them so that we're all clear. What's going on as capitalism comes into question and as proposals and movements and political leaders emerge to speak to this problematic capitalism. First there are the system's boosters, the people who think that capitalism is perfect, the best thing since sliced bread, the most efficient, the most progressive, the most likely system to generate growth and prosperity, all of that. These folks basically believe that even if and when the system hits a bump, has a problem, it best heals itself. The government shouldn't intervene. Nobody should intervene. It'll take care of everything itself. This kind of philosophy used to be called laissez faire. That comes from the French, let be. It's really what laissez faire means let it be. Like the Beatles song, capitalism is best left to its own devices. That's a very strong perspective, usually of right wing people, of defenders of this system, of folks who find nothing wrong with the inequality or the instability or the injustices that others associate with capitalism. What this means, for example, over the last 40 years, as the gap between rich and poor became greater, as more and more wealth was removed from the mass of people no longer shared with them, and taken instead by the top, enabling Oxfam in England, as I reported two weeks ago, to release a study early this year that indicated that 62 people, the richest 62 on this planet, now own more wealth than the bottom half of our planet's population, three and a half billion people. There has been nothing short of a class war under capitalism. And in that class war, as Warren Buffett has told us, the rich like him won and the middle and the bottom lost. Class war redistributed income and wealth from the bottom and the middle to the top. That's how capitalism worked when it enjoyed the least amount of regulation in a long time, because of the power of the capitalists to put into office people like Thatcher in England, Reagan in the United States, and all the others, left and right, Republican and Democrat, conservative and labor, who found it necessary to endorse deregulation, privatization, smaller government, and all the other slogans of those who think capitalism is perfectly fine, working just very well, and should be, must be left alone. So that's one approach to capitalism's problems. Ridicule any effort to change them, celebrate them, etc. But of course, that's not the only approach. Here's a second one. The system needs reform. We need to fix the capitalist system. Notice, please. This is not endorsing capitalism. It's not laissez faire. It's not let it be. It's, it's something's broken, let's fix it. It's not get rid of capitalism. It's not go beyond capitalism. It's fix capitalism, reform it. I'm going to give you some examples of what reformers, past and present have done so that everyone is clear what I mean by reform of capitalism. Here are some examples. We should break up the big monopolies or break up the big banks. This is a very old idea in the United States. It's at least 100 years old. Actually, 150 might be a better estimate that small businesses, working class people have complained that they're not in a fair level playing field with big business. That Big business holds most of the cards, calls the shots, runs the system for its own economic well being. And reform would then involve breaking up these monopolies. Trust busting, it's been called in our history. Antitrust activities, it's been called. Bernie Sanders is calling for the breakup of the banks. In the first half hour today, I drew attention to the new head of the Minneapolis Federal Reserve, the Mr. Kashkari, who's also in favor of breaking up banks that are, quote, too big to fail, etc. So reformers have often wanted to break up big concentrations of economic power. Here's another reform. The capitalism, left to itself, makes too many working people too poor. And the way to handle that, reformers say, is to impose a minimum wage, an amount of money that an employer simply is not legally allowed to pay less than, because if he does, he'll go to jail, he'll violate the law or he'll be fined, etc. Same kind of reform establishes maximum interest rates, not allowing lenders to gouge from borrowers more, more than a certain amount. Another reform is a progressive income tax, which says the richer you are, the higher the percentage of your income that you have to pay in an income tax. The argument has always been those who have more should be required to pay more, and that that is a legitimate way to hold a community together. To prevent capitalism from. From creating the inequalities it would otherwise create, because it always has, by limiting that inequality by means of a progressive income tax. Notice the point here that the reformers believe that capitalism, left to itself, produces inequalities, instabilities, business cycles and injustices that in the end are not tolerable in a democratic society, may not be tolerable in any society without producing conflict, bitterness, envy, resentments that are socially explosive. So that the reformers tell those who love capitalism and think to leave it alone, the laissez faire types, you're wrong in. In fact, you endanger capitalism's survival by not supporting the reforms capitalism needs to avoid blowing itself up. Interesting. The reformers want to preserve capitalism by fixing it. And they often point to theorists like John Maynard Keynes or political leaders like Franklin Delano Roosevelt as the embodiment of what they are after. Wow. The reformers want to reverse class war. They want to undo what capitalism does if left to itself, namely produce gross inequality, instability and injustices. It's funny then, that the conservatives confronted by reformers accuse them of class war when the irony is they are trying to undo the class war that capitalism left to itself. Perpetrates on the middle and lower classes. Well, then what's the punchline here is that reforms have mostly failed. Let me give you some examples, and this has been true for a long time. The efforts of those to fix or reform capitalism either don't work, or even if they do, they don't work lastingly. They don't endure. Out of the crisis of the 1930s came a law, a set of laws, but particularly one, the Banking act, otherwise known as the Glass Steagall act, that limited how big banks could get and what in fact banks could do. It separated commercial banks from investment banks. It did a variety of things. What's important for today's discussion is that the banks didn't want to be limited. The big banks didn't want to be controlled, regulated. So they went to work, literally before the ink was dry on that bill. And it was passed back in 1930. So a long time ago, first they evaded the law in a dozen different ways. Then they went to work to weaken the law. And in the 1990s they were finally strong enough. It took them 50 years that they were no longer satisfied with evading and weakening. They wanted to get rid of the law. And led by Citibank in New York, they succeeded, getting the Congress to get rid of, to end the Glass Steagall Act. And President Bill Clinton signed the bill that did that, and that was in 1999. So promptly, eight years later, the banking system collapsed again like it did in the 1930s. It's like a bad joke, isn't it? And out of the collapse of 2008, another bill, this one with the name of two other politicians in Christopher Dodd, Senator from Connecticut, and Barney Frank, Congressman from Massachusetts. The Dodd Frank bill, which again limits, regulates insurance companies, banks and so on. And from the time they proposed their bill right to the present moment, the banks of this country have been going to work, to evade, to weaken, and they will probably succeed in getting rid of the Dodd Frank Bill. It's a rerun of the same history, except it's concentrated in a shorter number of years. In other words, regulating these big industries hasn't worked very well. That's why we have the history in 2008 of a banking collapse eerily familiar in terms of what happened in the 1930s. Let me give you another example. The minimum wage. The idea of the minimum wage was to get the mass of working people, all of them, above the a certain minimum so we would have reasonable, decent livelihoods for millions of American workers. The way that was undone was by big Business pressure on the Congress not to raise the minimum wage along with the rise in prices. So what in fact happened was that the minimum wage kept being lowered because the prices everybody had to pay for a quart of milk or a dozen eggs or anything else kept rising, and the minimum wage wasn't raised along with it. In effect, it meant that the working people who got the minimum wage could afford a lower and lower standard of living. This is an undoing of the whole point and purpose of a minimum wage. It shows how reforms are undermined. Let me give you another example. The progressive income tax, passed in the United states back in 1910 as a tax aimed at the richest Americans who had the most wealth and who were thought to be evading their proper share, their fair share of the tax burden. What happened to that? Over the decades, rich people prevailed on the Congress to shift the burden of the income tax from those at the top of who were given countless deductions, countless exemptions, and to make it basically a tax on the middle and even a large part of the lower income recipients. And by shifting the burden on everybody, the basis was created for a political program against taxes as burdensome. In order to make that work, you couldn't have a tax just under rich because everybody would say, well, that's their problem, not mine. First you shifted onto the middle and the bottom. Then you used their upset about the cost of the tax to them as the basis for a social program to undo taxes on everybody. Not very subtle, but it worked. And it was another way of handling the problem. Indeed, today, the amount of money raised by what's left of the progressive income tax is not much more than what we levy on the payroll tax, which is not only not progressive, it's the opposite. The richer you are, the lower the percentage of your income goes for your payroll tax. So you shifted the burden first onto the masses, Then you made them turn against the income tax, and then you gave them a payroll tax, which is an unfair, regressive, basic tax. It's another sign of how reform fails. But perhaps the most stunning and revealing reality is what has, what is in common among all these failures? Those at the top use their wealth to stay that way. That's not a surprise. That's not very strange. It's kind of in the cards, don't you think? And therefore, if you simply impose a rule, a regulation, a law on those at the top, do you honestly expect in a society like ours, that they will quietly go away, pay all their taxes, obey all the rules and regulations, even when that significantly erodes their wealth. You know better, I know you know better. We all do. So what are we doing? The rich have always used their wealth to evade, to weaken, and to eradicate when possible. The rules, the regulations, the taxes, you name it. And that's why the rich are richer today than they have been probably for the last century. They have undone the reforms, all of those I gave you the. And countless more. They use their wealth to do that. They use a portion of their wealth to preserve, to protect and enhance the rest of their wealth. That is how it works. Well, that leaves us with the third response to capitalism, and that is structural change. This is very important. This is a view that says, left to itself, capitalism is unacceptable in how it affects a society. And reform, having been tried now for a good long time, has proven itself insufficient, inadequate. Therefore, we need structural change. What does that mean? Well, let's go through it first. The liberals, they want more regulation, more reform. Their response to all of the failures of past reform is we got to do more of it. More of it, more of it. And they set up agencies and they set up commissions and they set up oversight, and they pass the laws. And they're constantly upset, angry, and frustrated when the objects of the regulation and the objects of the law turn around and capture the regulators. It's literally called regulatory capture. So their idea of structure to have more regulation makes the same mistake as the earlier reformers did. Then there's the socialists of one kind. Those are the kinds who say, no, we have to go further. The government should own and operate enterprises to make them behave in a socially acceptable way, to make sure that inequality doesn't run crazy, to make sure that the system is stable. The problem with that socialist response, as evidenced by the Soviet Union, China and other countries, is it ends up giving an amount of power to the government that can be and often has been abused. So that doesn't seem like an adequate response either. Well, what does that then leave? Well, shouldn't come to you as a great surprise. It leaves the notion of democratizing the whole business, democratize the enterprise, democratize the economy. Everything else has failed. If you want the economy to serve the people, put the people in charge. If you don't put the people in charge, you won't get an economy that serves the people. This is not so complicated. It won't work. To regulate, to administratively control, to tax and so on. That's been tried, been there, done that. It doesn't work. Giving the government all the power raises other problems. We've now learned over the last century we don't want to face again. Well, then let us go to where the problem lies. The enterprise. It always gave a tiny group of people way too much power. The people at the top, the boards of directors, the tiny group of major shareholders who together run the companies, they run it for themselves to accumulate their private wealth, to accumulate the size and profitability and wealth of their businesses. If that means inequality, instability and injustice, so be it. That's their view. That's why they like right wing thinkers who celebrate capitalism left to itself. They would like that. But if reformers get in the way and periodically make a lot of noise, okay, they'll suffer that because they know they have the wealth to evade, to weaken, and eventually to eradicate the reforms as soon as possible. If you don't want a replay of what we've had in the last hundred years, then you really do have to consider the structural change that says no collectively cooperatively owned and operated enterprises where we democratically decide how to pay people, how to share the work, how to share the benefits with the residential communities where we live and with one another on the work. That democratization of the enterprise and thereby of the economy is the structural change that will finally deal with what capitalism left to itself and capitalism confronted by reformers, both liberal and socialist, has not yet succeeded in doing. It's learning from history, so we don't repeat it in this case with a capitalism that has become dysfunctional. Thank you very much for staying with me through this program. I appreciate it enormously as I do the opportunity to bring it to you each week. Remember to make use of our websites, rdwolf.com and democracyatwork.info and I look forward to speaking with you again next week. Gonna be my time, my time, babe. They ain't gonna change. Things gonna change. Yeah. Sam. Ram.