← Economic Update with Richard D. Wolff
Loading summary
Transcript3 lines
- [00:00]
A
Sam. Saint gonna change. Welcome, friends, to 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, and those looming in the future as we try to puzzle out where this erratic economy is taking us. 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, some of you have been very kind and I want to start this program by responding. You've asked whether or not it is correct that I've published a book of essays about the economic crisis, essays that build on, expand on and deal with many of the topics that we discuss on the radio program. And the short, quick answer is, yes, I have. And this is the book in question. It's called Capitalism's Crisis Deepens. It was released over this summer, and it is full of essays, usually short ones, about 1,000 words each, that cover a whole multitude of topics about the economy we're living in. Capitalism's Crisis Deepens. And if you're interested, please write to us here at the websites that we maintain, which is your way of communicating and partnering with us and in developing our understanding even further. And while we're on those websites, let me remind you, RD Wolff with 2f.com is one of them and democracyatwork.info is the other. That second one again is Democracy at Work. Democracy at work, all1word.info info. We have been following an unusual bill that deals with economics and elections working its way through the California legislature and it is coming to a head this Tuesday on the believe it's the next to last day of August in the State Senate in California, where the California DISCLOSE Act AB 700 will be decided by the Senate. There it is, a bill that requires much more complete and open acknowledgement of who's paying for the ads for various candidates and so on. It's being fought out. If you're interested in that battle as we have, then that's something to pay some close attention to. In this last week, many, many things have been going on. It looks as though the inventory of materials for me to go over with you each week is simply getting bigger and bigger. I don't know exactly why that is, but let's jump right in. Universities were in the news this last week and I want to talk to you about them. I was about to say it's good news and bad news, but the truth of it is it's good news. And then what you Might call old news, but worth looking at again. Let's begin with candidate Hillary Clinton and her problems with universities. The university in question is called Laurier University. L A U R E A T E and Laureate University is a huge university, has about a million students worldwide, mostly in Latin America, and with five schools here in the United States. Laureate is a for profit university. Right away, bells should be ringing. Education is not something that in this country at least and in most countries of the world, is handled by a capitalist enterprise seeking to make money off of it. It's considered more a social service, something the community needs and wants and will pay for. Because we're all better off, the assumption goes, if we're educated the than if we're not. And it shouldn't be made dependent on profit. But there have always been for profit universities that see a way to make money doing this, and Laureate is one of the biggest. They are being investigated in Brazil for corruptions of various kinds, in Chile for corruptions of various kinds. Three of the five schools that Laureate operates in the United States are under what the US Department of Education calls heightened cash monitoring. A very nice comment or nice way of describing financial troubles. Well, why am I bringing it up? Well, the founder of Laureate University, Doug Becker, is a major donor, you guessed it, to Democratic causes and has made huge contributions to Hillary Clinton's campaign and to Barack Obama's campaign. Laureate is also listed as a donor to the Clinton foundation in the range of 1 to 5 million dollars. Okay, I could go on and on, but let me give you the big one. In 2010, Becker, the head of Laureate, signed a deal with Bill Clinton to be its new honorary chancellor. Between 2010 and 2015, at the time that Hillary Clinton was Secretary of State, he was the honorary chancellor and received $17.6 million for his role. According to Laureate University, his job was, I kid you not, I'm quoting, to inspire people. As soon as Hillary Clinton announced for president, Bill Clinton stepped down as honorary chairman. They also maintain this university, something called, if I understand correctly, the International Youth Foundation. It's not so clear what the relationship between that is and laureate officially, but Mr. Becker, who runs Laureate, is chairman of the board of the International Youth. So you can see again the same thing, that International Youth gets all kinds of contracts from the State Department. The connection, therefore, between the State Department's money and the Clintons, both of them, and this university smells. It smells of inference peddling. It smells of pay to play. It smells universities for profit and politics. Mr. Trump also runs a university which he modestly calls the Trump University. And it is being investigated by New York State and elsewhere for all kinds of corrupt practices having to do with charging students inappropriately for services either not rendered or not being what they're supposed to do. Two candidates, two for profit universities. It doesn't really get any smellier than this, does it? Well, I told you there was good news about universities, and boy, is there. The National Labor Relations Board, the highest board governing the relationships between employers and employees, rendered a decision last week that has enormous impact and potential. Here's what the National Labor Relations Board decreed and decided. Graduate students at private universities can collectively bargain. That is, they can join unions and get those unions to serve them to get a better deal from the university that employs them. Before proceeding, let me mention, as I should, that when I was a graduate student, I. I was employed in particular by Yale University, where I was a student. So I have direct experience of this situation. For many years, private universities resisted unionization of their graduate students, even though those graduate students were employed. They were paid to do research, they were paid to do teaching. They were paid to do a variety of academic functions, rather like their professors were paid. But they were told that because they were still getting their degrees, that is because we were both employed by the university and enrolled as students at the university at the same time, that somehow this rendered us unqualified to have a union to bargain with and for us to get a better deal. And if you're not familiar, universities have saved billions of dollars over the years by getting graduate students to do the work of teaching, which would cost a great deal if you hired a regular professor to do it, but costs a small fraction of that by getting a graduate student to do it. And moreover, the graduate students, who are having trouble paying for the fees anyway, are desperate for income and will do. Moreover, they'll be very docile because they wouldn't dare complain about the conditions of their employment, since they would be complaining to the very university upon whom they depend for the degree that they're studying to get. So you can see, it's a captive group. Well, at Columbia University, and hats off to the graduate students there, they tried. They persisted. They. They took it to the National Labor Relations Board. And this last week, the National Labor Relations Board reversed past decisions, the most recent being the decision in 2004 to deny the graduate students at Brown University in Rhode island the very rights that are now being given to all graduate students at private colleges. You can organize a union, but why do the universities object? Well, there are several Reasons? Let's quickly look at them. Number one, they don't want to have to pay more money to the graduate students, which they will probably now have to do because the unions will be organizing the graduate students. And the graduate students will learn about unions. They will learn about striking and bargaining for better conditions, which the union will make them better able to do than they were able to do it now, which is why they're trying to get these decisions and form unions. But both the students and the university agree that money is not the main reason. Well, what was the main reason that universities opposed graduate students whom they employ and pay for definable teaching and research functions? What was the problem? The problem, it turns out, the universities admit, is control. The university administrators don't want the students, through a union, to, quote, unquote, control. What happens in the university that the administrators want to keep to themselves? They want the students not to be organized for fear that they will have some control. Okay, let me translate that. As an economist, why are they really worried? First of all, the control argument is silly. A university is a place where research and teaching goes on. If an administration of a university is interested in doing a good job, they want the professors and they want the graduate students to participate together in doing that job the best way possible. The students, the graduate students who teach the undergraduates are the closest to them, know best what problems they have in learning, what difficulties they're facing, what works well in the classroom, what doesn't. To exclude the graduate students from having some control over the teaching process is self defeating, stupid, and probably not true. Well, then the same applies to the professors who have to have control and who in many universities are in a perpetual struggle with the administrators precisely over the control they ought to have, but that administrators are always nervous about giving them. And why? Because it's always possible that the professors, like the graduate students, will want to exert control that cost the university more money, might make the university have financial problems that the administrators don't want, might make arrangements that give the administrators less power, less elegant offices, less control, less money than they now get. If you look at most private universities, the money and the perks given to administrators are out of control. And they have been for 30 years. That's really what's going on. But there's more professors at most private universities are not organized in unions. They've been afraid, they've looked down their nose at the concept of unions, and they have suffered. Which is one of the ways you can account for how well the administrators do relative to the professors in most cases. The real fear here is that the graduate students will be the leaders, the pioneers, the vanguards. They're young, they're angry at the way they've been treated, and for very good reason. They're overworked, they're underpaid, and. And they're under recognized. Mobilizing in a union is a good shot at changing all of that. And here's what the administrators fear the that the students will be the vanguard. They will organize unions, they will bargain with the administrators, and they will win games. And the real fear of the administrators is that the model of the graduate students doing it will. Will be a spark that finally overcomes the hesitancy of the professors to do the same thing. And then imagine an administration that has to deal with an organized graduate student workforce and an organized professor workforce. And Lord help us, if the unions of professors and the union of the graduate students will work together, then the administrators would finally face the opposition to their rule over a declining university institution that they should have had years ago, but may now have. Thanks to this decision. It is a real victory for the graduate students and for higher education across the board. The next update is kind of beyond words, so I'm going to read it to you straight. August 19 Reuters article by Scott Paltrow P A L T R O W Again dated August 19, here's the US army fudged its accounts by trillions of dollars. You heard me right. The Department of Defense has an inspector general works in the Department of Defense and, and his or her job is to look at the accounts of the army, which gets more money from the federal government than anybody else does and spends hundreds of billions of dollars to see that that is properly accounted for. In a report this June 2016, the Defense Department's inspector general said the army made, I'm quoting now, $2.8 trillion in wrongful adjustments to accounting entities in one quarter alone in 2015, and for the whole year, the whole last year, $6.5 trillion. This report of 2016 June reaffirms a 2013 Reuters series revealing how the Defense Department falsified accounting on a large scale. Wow. The army lost or didn't keep required data, and much of the data it had was inaccurate, said the inspector general. Where is the money going? Nobody knows. Why in the world is it possible for the biggest single expenditure the federal government makes on a particular institution, in this case the military? How is it possible that that money isn't strictly managed, that you can't get a proper record that the Defense Department itself doesn't know what's going on. And the answer is, you get that when both of the political parties that run the country never question in any fundamental way what the military is doing. The military gets a passion like our economic system. Capitalism gets a pass. You don't look at it as a system. You don't look at the military as a system. And when you don't subject any system to criticism, to the light of debate and argument from critics and defenders alike, then you see rot set in. You see it able to indulge its worst tendencies because no one holds it accountable. That's our economic system. That's our military. Next item. This is so grotesque. It's hard for me. But bear with me. The richest person in the world is Bill Gates. Okay? In the year 2012, that's four years ago, Bill Gates fortune was $60 billion. 60 $60 billion. In the last Friday of August, if I have my records correct, and I know I do, his fortune hit a new high. $90 billion. Let me make sure we're all here on the same page. Bill Gates over the last four years saw his fortune go up by 50% from 60 billion to 90 billion. Is that because of work he did? Answer not at all. He didn't do any work. This is because the value of his stocks and bonds rose. And why is that? Because we had a quote unquote recovery. The recovery of course affected only corporate profits and the stock market that reflects those profits at least in and that's why he did so well. He's in the top.0001% that has had a wonderful recovery. Did your income not go up? Did your wealth not go up by 50% over the last four years? And the answer of 99% of Americans is no, it didn't. Well, that's because you're not enjoying a recovery. If the 30 billion gained to Mr. Gates was taken away from him by a taxing authority and used to help the millions of people whose lives could be transformed by $30 billion, he would still be among the hundred richest people on this earth with his 60 billion ungrowing since the last 2012 measure. But we don't do that in our value laden, ethical, religious, family values society. We don't do that. We let the richest man in the world become 50% richer still while the world is falling apart and the suffering spreading everywhere. As I said, there's not much you can say about this. But the Congress of the United States did say something about it and that's my next update. In August of 2016, the Congressional Budget Office, a nonpartisan research arm of the United States Congress, issued a report called Trends in family wealth 1989 to 2013. And I'm going to just summarize for you over that period. That's 1989 to 2013. Basically the last generation, 25 years, roughly the top 10% saw their wealth go from 30 trillion to 65 trillion, more than doubling the top 40%. Below the top 10%, they saw their wealth go up a very modest 12 to 14 trillion. And for the bottom half of the United States, the bottom half of our country, their wealth went from 1 trillion to less than 1 trillion. That's right. Over the last generation, the bottom half of our country saw its wealth go down While the top 10% saw its wealth more than double. You want to understand our political chaos, Everything from Trump to Bernie Sanders to Black Lives Matter to Occupy Wall street, all of it, then you're looking at probably the single most powerful statistic of the grotesque, unconscionable inequality that our capitalist system is imposing on us. Wow is really all you can say. And so it was this last week that wow was on everybody's lips as the Mylan Pharmaceutical company, my L A N got itself in trouble having raised the price of something called the EpiPen. It's a life saving injection gimmick that helps you if you have an attack by an allergy that could kill you. Over the last few years, between 2007 and this year, the price was raised by the Mylan Co. From 56 per injection to $318 per injection, making a whopping profit for the company and raising the salary of Heather Bresh, she's the head of the company, to $18.9 million. Isn't it wonderful? This has been going on by companies in the pharmaceutical business for years. It's one of the reasons the government has so much expense to for medical coverage for people. It's not that people are poor and need medical coverage. It's not that people who are poor and need medical coverage go too often. It's because the pharmaceutical companies, among other members of the medical industrial complex, are ripping us all off. There has been an outcry because it's election season. Everybody has been attacking my land for this rip off, even though it's no worse than what is done by most of the pharmaceutical companies. But the sudden concern and the loud noise has made Mylan decide to not raise it that much. They're cutting back by 50%. So they didn't go from $57 to $300 and something, but only from 57 to 150 and something. And we're all supposed to applaud. But there is a lesson. If there's a mass movement, particularly if it's led by our political leaders, turns out you can unroll a lot of things that the corporations would like to do to us. Yet another update. Harley Davidson, the motorcycle company has agreed to pay $12 million in a civil fine and to stop selling illegal aftermarket devices. You know what they do? They provide phony results for pollution to. Just like Volkswagen got caught doing. Well, Harley Davidson did for the motorcycle what VW did for its diesel automobiles and they got caught and they're paying a fine. But don't cry too much. The fine is $12 million. In this year, Harley Davidson will be selling $6.5 billion worth of motorcycles and equipment. $12 million works out to less than 1, 100 of a percent of their business this year. It's a small bump in a profitable road for Harley Davidson. Last thing I have time for. Donald Trump is famous for proposing to build a wall along the border with Mexico to stop illegal immigration. It's always struck me as bizarre since presidents, Republican and Democrat alike have in fact been building walls along the border with Mexico for many years. Doubling, tripling the security that we have there, fences, walls, officers who patrol equipment for them. The budget has gone off the chart. There's nothing unique about Mr. Trump. He's simply putting it out there concretely and showing what has been done. Last item we have time for a new book is scheduled to be released in October. It's called Lucifer's Banker. The author is Bradley Birkenfeld who worked for ubs, one of the largest wealth managing banks in the world based in Switzerland. He worked for them for years helping them help Americans hiding their income and wealth from taxation by the United States. He got caught. He went to jail for 31 months. But he was also awarded by the United States Internal revenue service with $104 million award for having given them the help that allowed them to shut down at least some of these tax evading rich Americans, no doubt folks who protested their patriotism. Author again, Bradley Birkenfeld, Lucifer's Banker. It shows things that I will have more to say about next week. We've come to the end of the first half of this program. This is economic Update. We will now turn to a number of major items that deserve some more extended attention. Please stay with us. We will be right back.
- [29:12]
B
I was talking to a friend of mine Said he don't want no wars no more they're building bombs while our schools are falling Tell me what in the hell we're paying taxes for well, no wonder we all stop paying taxes now what if we all stop paying taxes Stop paying taxes, y' all. Now tell me who gonna buy their bonds, their tanks, their planes and all their guns?
- [30:00]
A
Welcome back, friends, to the second half of Economic Update for this week. Once again, I'm your host, Richard Wolff. And once again, I want to begin by inviting you to partner with us to make use of everything we do on this program and on the two websites allied with this program. Please make use of them. They're available to you 24. 7. As this radio program obviously cannot match. There's no charge whatsoever. The first one is rdwolf with two Fs.com and the second one, democracyatwork.info both of those websites will allow you to communicate to us via email your likes, your dislikes, what you would like us to talk about, what is on your mind that we can help this program be responsive to. Likewise, both websites allow you to follow us by a click of your mouse in terms of Facebook, Twitter and Instagram. So you can keep up with what we are doing in the continuous way that we indeed update what we do. And finally, there are ways to share on social media all that we do with other people, and we urge you to do it. There are files on the website, written materials, audio files, radio interviews that I do, videos of a variety of things that can all be shared with other people that you can listen to, that you can make this program have a greater impact on more people by your own relationship, your partnership with us. And we invite you, we urge you to do that. Okay, let's begin with some topics that require a bit more in depth attention compared to the updates with which we peppered the first half of this program. We are suffering from extraordinary inequality in the world economy here in the United States, but globally as well, in virtually all countries. And that inequality, whatever you think of it, whatever moral attitude you have to the growing gap between the haves and the have nots everywhere, I want to make sure you understand one of its key economic consequences. First, what kind of inequality are we talking about and why did it happen? This is not complicated. The major cause of inequality over the last 40 years had been two phenomena happening together. The first one is automation, the replacement of workers earning a salary by a machine. Employers do that when it's profitable for them. To do it. In other words, when the cost of the machine over its effective life is less than what you would have had to pay workers over the same period of time to do the same thing, when a machine is cheaper than a worker, you automate, that is, you install the machine and you fire the worker. Please keep that in your mind because over the last 40 years we've had a stunning amount of that kind of activity. Why the computer? Modern telecommunications have been able to give employers the opportunity, by buying and installing computers, to fire millions and millions of workers. Number two. And going on at the same time, employers found another way to save on labor costs this time. Not by substituting machines for workers, but by relocating production, moving production from those parts of the world where wages were high, North America, Western Europe and Japan to areas where wages are much, much lower. India, China, Brazil, etc. This allowed low wage workers to replace high wage workers. Well, when you put these two things together, automation, replacing workers with machines and relocation of capitalists replacing high wage workers with low wage workers, you have the result we're now living through. Namely, the mass of working people is now less well paid when you really look at their situation than they were before. They're working more jobs, they're working more hours, partly because they're desperate in order to get by, because their standard of living is going down. The wages they get are lower than they used to be in terms of what they can buy. The security of the job is less, the benefits that go with the job is less, the public services they can turn to are less. The picture is unremitting. And the result has been that the mass of people have had harder and harder economic times. They can't buy what they used to. They, that's the key point. The rich have gotten much, much richer. In the first half of today's show, we gave you several statistics that dramatically show that. And there's no surprise because the employers and all the people that hang on to them, they're executives, they're professionals that they hire. They've been doing great because they've gotten the same production, but now it cost them less, either because they automated or they relocated abroad or, or that many companies did both. So the profiteering has made the rich richer and the same profiteering has made the rest of us have a harder time. But here comes the joke, if you like, on capitalism, or what theorists call the contradictions of capitalism. In the end, the capitalist system has to sell all the stuff that its computers and, and its foreign workers are producing. But to Whom can they sell them when the mass of the public that buys what's produced is having its purchasing power constricted because they're being replaced by machines, because low wage workers are replacing high wage workers. When you put it all together, people have less money to spend. And the joke on capitalism is its own decisions to automate, its own decisions to relocate to low wage places is coming back to haunt the system because they can't sell what they have geared up to produce. And the inability to sell is a downward pressure on the very profits that they first got up by automating and relocating. This is a contradiction of the system capitalists always have and always now are looking to economize on labor. Hire fewer people, substitute a machine, pay workers less, find cheaper workers. There's lots of strategies, but they all have one goal and one result. Workers have less to spend. And that of course means that the capitalists, having succeeded at cutting their wage costs, now discover that that means they have fewer people to buy what they produced. Is that an irrational system that self destructs that way? You got it. And one of the critiques of capitalism is that it works in this absurd way. We are living through it. Higher profits than ever, rich have gotten richer than ever, but they don't invest, they don't create the jobs we need. The only jobs left are low paid, low security, no benefit jobs. That's because there isn't the purchasing power to make it rational for businesses to invest. That's why our monetary policy has driven interest rates to less than zero. That's why we're not recovering around the world. And the mediocre recovery here is not good for most people. It's the absurdity of capitalism's own contradictions that lie at the base of a dysfunctioning system. Next item. People are talking often about the costs of unemployment. Let's be real clear what they are and what irrationality of capitalism as a system they reveal. If you lay off a worker, you fire a man or a woman from a job. Let's take an example. An employer realizes, looking into the situation, that keeping John or Mary on the job is costing the employer, let's say, I don't know, $5,000 a year, in other words, paying that employer and then measuring that against what the employee is doing, paying that employee, keeping them working, but getting the output that they produce, they're losing $5,000 a year. So the employer says, this isn't good for me, I'm not going to keep John or Mary. And they tell John or Mary don't come back Monday morning. It's Friday afternoon. Here's the famous pink slip. You're fired. Now, let's look at this as economists. John or Mary go home. They have no job. They feel awful that weekend, realizing that they're not only going to be without a job Monday morning, but they're not going to have the income that comes from the job Monday morning either. This immediately becomes a problem. For whom? Not just for the unemployed worker, but from his or her spouse. The whole family's finances are now threatened in crisis. And that means if both of the married couple or the people living together, whatever their relationship might be, they are affected. So will be any others in the household, elderly that may be living with them, children that have been born and are being raised by them. These people are all affected and all in negative ways by the decision of that employer. But we're not done. The neighborhood is affected. The family that suffers unemployment will not be able to keep up the painting of the house and the maintenance of the car and the maintenance of the garden. And you get the picture. The neighborhood will suffer. The values of the property in the neighborhood will suffer. The ability of this family to play a role with their neighborhoods, to go on picnics, to have events, all of it will suffer. But we're still not done. Will there be emotional difficulties that the family will have? You betcha. There's a thousand studies to show that children of unemployed parents have harder times in school, have more discipline problems. Do the police have greater difficulty in neighborhoods with high unemployment? You bet they do. Are there all kinds of social services those people turn to at a time when they don't have a job? You betcha. So now let's do an economic task. Let's ask, what is the benefit of firing a worker? Well, we know it's the $5,000 that the employer saves by firing John or Mary. What is the cost to society of that unemployment that Mary or John suffers? Well, if you add up all of the costs to the spouse, to the household members, to the children, to the society, to the government services, it comes, in most cases, to many times $5,000. In other words, there's a fundamental craziness in our system in which a decision by a private employer to save $5,000 can have society incur costs of 50,000, of 20,000. That's irrational. Be much wiser for the society, for the government, for example, to give the employer five thousand bucks to keep Mary and John there working, because that's a much cheaper way to solve the problem. Than what we do now. Here's an even better idea. Rather than give the private employer the 5,000, why doesn't the government just hire the people right away to do socially useful things? They'll be better off. Their spouses and families will not suffer, Their neighborhoods will not suffer. The society will get useful things done, and the private employer will no longer have to have an employee that's costing him or her money. Wow. The minute you begin thinking about unemployment, you realize it's crazy. It's an irrational act. In a society that needs so much to be done, that needs so badly for unemployed people to have a good job and to have a secure income, to allow a system to function that does what we know is crazy, means that we're not thinking real well. And it means that we're not doing what we need as a society. Here are just some of the things we could do. The minute a person loses his job in a private employee, as a private employee in a private company, the government will provide useful things for them to do. It's what Franklin Roosevelt did in the 1930s for 15 million American unemployed people. So we know how it works and we know how to do it. And because we did as a nation, why in the world have we not learned the lesson? Maybe it's because private employers don't want the government to be a competitor, don't want good jobs to be provided to people, decent salaries. Because then their ability to pay people very little will be harder to get away with, won't it? Here's another solution. If we become more efficient because we have more machines and workers are more productive, here's a solution. Rather than firing the workers we don't need, let's keep everybody working. Here's how we'll do it. If we're 10% more efficient, then everybody works 10% fewer hours a week. You don't have a 40 hour week, you have a 36 hour week. The employers will pay you the same. Why is that important? So that the workers have the same amount of money to buy stuff. The profit will be the same because the company is getting more stuff just as it got more stuff per worker from before. The company is going to be able to sell what it produces. It's going to have no problem doing that because the workers have the money. And we will all have four hours a week of less work. And everybody will have a job because the employers will have to hire more people if they need it, can sell more stuff because Everybody's only working 36 hours. Shared unemployment means we all have leisure. That the way technology helps us be efficient rewards us all with leisure rather than rewarding a few with profits and subjecting many to unemployment. It's irrational the way this system does it. Next item, the logic of insurance. This is becoming another craziness of capitalism that needs to be addressed. What is the point of insurance? And I mean here. Health insurance, life insurance, medical insurances of all kinds, fire insurance for your home, automobile accident insurance for your car insurance in general? Here's the idea. Each of us pays a little bit of money into an insurance fund. The reward we all get is peace of mind. We now know that by putting a little bit of money aside every week, every month, we will be taken care of. If a fire hits us, a car accident happens, we get sick. All the things that can happen to disrupt a life and therefore a family and therefore a neighborhood and therefore a whole country can be avoided because we know if there's insurance, that if it should happen to us, we will be taken care of for from the insurance fund. So everybody who contributes gets peace of mind. The relatively small number of people who actually have a fire or have an accident or get sick, they will be taken care of by this fund. So we're all better off knowing that that's there. If a public authority did this, general insurance, let's call it, we would all pay a little bit, and we would all be covered for any accident we can't foresee that might befall us. The government would collect from us just enough money, which it could check by actuarial rules and by experience. Just enough money to pay the cost of taking care of the few of us who have the problem that we're insuring against. And that would be the way to handle it. And that would be rational. Everybody would have peace of mind, and the money would be there to take care of those who are afflicted by these unforeseeable events. We don't do that in a capitalist society. We allow private insurance companies to come in and do it. And here's how that works. The private insurance company says, okay, we're going to raise enough money from everybody to have the money there if something happens. But we're also going to have a huge apparatus of administrators, officers, secretaries, executives, because we're going to always be looking to make money. And therefore we're going to try to figure out how we can deny you a claim, blame you for it, argue with you as to what is a reasonable. We're going to have a big bureaucracy to maintain and so we're going to spend not only on helping you if the bad thing happens, but we're also going to spend a lot of money on an administrative apparatus that a public agency would never do. And then the big one, we need to make a profit because we're a capitalist enterprise. So we're going to charge more money than it costs to meet the claims and more money than it costs to pay for the big administrative apparatus, because we have to make a profit off it. The end result is that insurance costs much more for all of us to have peace of mind than it would if a single authority did it. Wow. Why then do we have it? Because it's privately profitable, and the folks in the insurance business don't want the competition from a government or a collective agency. And this could be done at the local level, it could be done at the regional level. Doesn't have to be done at the federal level. We could have local arrangements for all of this. It is kind of crazy what we do. And, you know, we already do it. We don't allow private fire departments, do we? And we don't allow, in most cases, private police departments. We do that because it's much cheaper and much more efficient to have this done collectively without the profit motive entering into it. But we dare not use our brains in understanding this process to extend it further. Last item for today, subsidies to capitalism. Many of you write to me and ask, does the government subsidize capitalism? Well, my response to that is to almost say, but I'm polite, so I won't say something about a certain habit that bears have in the woods and ask you whether you think that habit is indeed one that the bears have. Yes. The answer is unequivocally yes. The government not only subsidizes capitalism, it always has. The notion of a capitalism without massive government subsidy is a fantasy, a one entertained by people who like to call themselves libertarians, among other names. Governments have always subsidized capitalism. If you know anything about economic history, you will know that the forms of subsidy vary because there's a very great creativity in all the ways that capitalists have pushed for, argued for, bribed their way in to get government subsidies. I'm going to give you just a few examples. Between 1945 and the present, the United States shifted the burden of taxes. That is, it shifted who had to pay the bulk of the taxes. For example, at the end of World War II, for every dollar in income tax raised by the United States federal government from individuals, for every dollar raised from individual People, citizens of the United States. The government raised $1.5 from companies, businesses. In other words, the income tax, which has always been a tax that taxes your income as an individual and taxes the profits, the net income of a corporation. The burden was shifted over the last half century or more off of the corporations. So, in 1945, for every dollar raised from individuals, the federal government raised a dollar and a half from companies, here's what the relationship is today. For every dollar raised on individuals by the federal government, it raises 25 cents from corporations. You heard me correctly. That's a massive shift of the burden of taxation off of corporations on to individuals. That is a massive subsidy to businesses. They have argued for having taxes cut on them and they got them. You know what that means? Less of the corporate money is going to the government to pay for all the services that the government delivers to the corporations. That's right. The corporations didn't want the government services to stop, nor did they. They just didn't want to pay for it, which is what they got. That's a subsidy. When the government taxes masses of people to provide the roads for the companies, which makes them more profitable. The infrastructure, the harbors, the Internet connections, you name it. When the government has military bases around the world to make sure that foreigners buy American goods that they sell to American companies, what those companies want to buy, and at an attractive price, you betcha. The government kept providing services to the corporations, even though it didn't tax them the way it once had. Let's talk about the roads. Without the government maintaining the roads, we wouldn't be buying automobiles from Ford or Chrysler or General Motors or any of the other. The government built the roads. The government maintains the roads. They don't have to pay for the roads, without which the cars wouldn't have a market. Gee. And the government doesn't build mass transit as it could. A really spectacular system of public trains and trolleys and so on, which would mean we would buy fewer private cars, wouldn't we? And that would not be fun for the private profit of the car companies. So they get a subsidy by means of the road system. I could go on and on. In military contracts, the government has something called cost plus come contracts. Whatever the cost of the military equipment, the government pays the company. That cost plus a profit takes all the risk. Out of the defense business, there's a subsidy all the times that a city or a state has given the money or raised the money in a public bond issue to build a sports stadium right up to the Olympics. This is a wonderful way to disguise a subsidy. Instead of saying, hey, we're going to subsidize all the companies that make money off this event, the baseball team, the hot dog concession, the parking attendant company and all the rest. We talk about how we love sports, we talk all about the sports to hide from view. The subsidy to capitalism. Why do I say this? Well, I could go on not having raised the minimum wage for many years is a subsidy to businesses that hire people who are at the minimum wage. The subsidies are endless. And the reason I stress it is not to overcome the silly notion that there's such a thing as a capitalism without government support. Never has been one. It is a fantasy of people. That's not the reason. The reason is I talk a lot about an alternative system, a system of worker co ops that would operate in a completely different way, democratically, equally, never have the inequality that we suffering from now. And people say, well that couldn't happen without government support. You know what, you're right, it couldn't. But why in the world should it? Where does the idea come from that a new system would be less dependent on the government than the old one? All systems, slave, feudal, capitalist and a worker co op based economic system would look to and get from the government all kinds of supports to make it work and to make it succeed. Thank you for staying with me. We've come to the end of the program this week. Next week, by the way, we're going to be talking with a guest who's a specialist, an economic specialist on Puerto Rico about that island and its role as the Greece of the United States and what we all can learn from what is going on there. I look forward to talking with you again next week. Sam.