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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 how it all looks down the road in the economic system we live in. 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. I want to remind you that there are a number of services and features of the websites that we maintain that I tell you about pretty much each week, and I want to start today by mentioning them and making a couple of announcements. The first one is rdwolff with 2f's.com and the second one is democracyatwork.info both of these websites are designed and updated every day to serve you. There's a complete archive of these programs. There's all kinds of articles, video, audio, you name it, it's there. Both websites provide you with ways to communicate to us what you like and don't like about the program, questions you'd like us to respond to, such as one or two that I'll have time for later this morning or this afternoon, depending on when you hear this program, I want to also let you know that you can follow us on Facebook and Twitter by just clicking on the appropriate icon on either of those websites. And lastly, I want to mention again that I travel around the country and that I am open and interested to find other opportunities to speak. One that I'm particularly excited about, that I wanted to mention again will take place the evening of October 29, Thursday, October 29 in Berkeley, California. It will be at the Berkeley City Club and it's hosted by Living New Deal. That's a wonderful institution hosted at the University of California, Berkeley that is having a reception and an evening presentation and I'll be talking there about what the New Deal taught us and what it teaches us about today when we're in the second worst collapse of capitalism and have much to learn from what was done and not done the first time capitalism collapsed on such a global scale. I also want to make a new announcement, one I've never made before but that I'm proud to announce. Democracy at Work, the organization that brings you this program has has entered into a partnership with a group of specialists, lawyers, accountants and others with a 20 plus year history of helping working people convert conventional businesses into worker co ops. That is something we talk about often on this program. That's something we will be talking about on this program some more, but I wanted to invite those of you that are interested in converting a business, working in a business that is thinking about conversion, perhaps because the folks who started it are retiring and wondering what to do with it and might be open to selling it to their own employees. But that is a social movement going on in this country that we are very supportive of, and we're now able to offer the kinds of technical services to make it possible that we did not have organized in this way in the past. So if you're interested, go to those websites, let us know and we will follow up. Let me turn then to the shorter updates that deal with some of the things that happened this last week. First and foremost, I want to say a few words about the debate that happened earlier this week because it raises some interesting economic realities. I want to talk particularly about something Hillary Clinton said, and I want to connect it to a recent book that was published by Robert Reich. The book by Robert Reich is called Saving for the Many Comma, not the Few. Saving Capitalism is its major title. That's what I want to ask you to keep in your mind the other night in the debate, a debate between Hillary Clinton and Bernie Sanders and three other people who didn't seem to be clear as to why they were there. And most of us didn't have a clue either, other than the formality in the course of the debate. At one point, Mrs. Clinton said, you know, these words are almost exactly her words. You know, sometimes, every so often, you have to save capitalism from itself. And I was struck that Robert Reich writes a book called saving capitalism, and Mrs. Clinton refers to her own policies and what she might do if she were president as, quote, unquote, saving capitalism. This is an admission, whatever else it is, that capitalism needs saving. Mrs. Clinton says it needs saving from itself. Mr. Reich is more in the direction of saying we need to save ourselves from a bad kind of capitalism. And as you probably know on this program, I leave it off at we need to be saved from capitalism. But my point here isn't about these differences. It's about the fact that for the last half century in this country, it was basically taboo to say anything negative about capitalism, to be anything other than a cheerleader for this system, to pretend, and that's what it required, that it was the greatest thing since sliced bread, if not better, and that it was upward and onward with progress and prosperity for everyone. What a change we saw the other night when we're now having to talk about saving capitalism from itself, from its own failures, from what it is doing to most of us as opposed to the few, etc. Capitalism is now in play, and that's an enormous change culturally, ideologically, and it will have very real effects on the lives we lead. Second update for today. There are now such an accumulation of signs that we're about to go into another economic downturn that it's time for me to comment on them. I don't make predictions. I don't believe in it much, but the signs are now pretty much overwhelming. For those of you that look at the financial press, you know that they have been accumulating this last week. There were two crucial numbers very closely related. One was the number for retail sales in the United States. Retail sales are a pretty good index as to what the mass of people are or are not able to afford. And if the mass of people can't buy in a growing way, this economy cannot grow. And the signs were of a very Flat retail year, 2015, no growth over 2014. But even more stunning was the revelation Wednesday of last week by the Walmart Corporation telling the world that its profits are scheduled to go down by 12%. That's an enormous drop in profits, and this is a drop of the largest corporation in the United States by employment and by sales, and a company that is obviously in the retail sales business. So these two numbers reinforce one another in their signs that economic choppy waters are at very least coming our way. Since most people have not recovered from the crash of 2008, the news that we're heading into another downturn is very bad news indeed. And I present it to you or bring it to you, not in order to get you depressed, last thing on earth I want, but in order to get you prepared. And I was struck in thinking about the significance of this by a group of statistics gathered this last week and published by the Federal Reserve in Washington. I can't give you all of it, but I wanted to give you a thumbnail sketch of these numbers because even though they are few, they give an insight onto the American economy that tells you how fragile things are in the face of a declining prospect. 22% of American workers are confident that they will be able to live comfortably in in their retirement years. That means 78% are worried about it. Four fifths of our people are anxious about their retirement. Wow. 31% of the respondents to a Federal Reserve survey have absolutely no retirement savings or retirement plan whatsoever. One third of our people have nothing for whatever happens to them after age 65 to 70. Let me continue. 47% of American households, that's Roughly half would have to. This is what they told the Federal Reserve would have to borrow money or sell a possession if they had an emergency that cost $400 or more. Let me repeat that. Half of the people of America couldn't meet a $400 emergency expense unless they borrowed from somebody else or sold some of their possessions. Approximately 60% of Americans are homeowners. That's down from 70% in 2007. That's an incredible drop in a short number of years. These are people who have lost their homes, have gone from home owner to renter. But let's remember, in case you're wondering, that homeowner is a bit of a euphemism. It means you and whoever the banker is that lent you the money for your home are the homeowners. And if I had time, I would provide you with the statistics to show you that the proportion of ownership between people on the one hand and their bankers on the other has gone drastically in the direction of the banks. People have used their homes as a basis for borrowing, giving the bank a much larger share of the so called owner owned homes occupied by the owner than ever before. This is a very fragile economy going into an economic downturn. Third item, my hat's off to the German people. Last week, during the week, and this was very poorly covered in The United States, 250,000 people from every corner of Germany, east, west, north and south, gathered in Berlin. A quarter of a million people marched down the major street of Berlin in opposition to something called the ttip. This is the Transatlantic Transatlantic Trade Partnership or Trade and Investment Partnership, excuse me. It is the equivalent for the Atlantic of what the TPP is for the Pacific. These are both secretly negotiated. Let me underscore that secretly. No press, no public discussion, no revelation of the deals being cut and made that rewrite the rules for international trade. Our incomes, our job prospects, all of that is heavily dependent on international trade. The US Economy is more dependent on the rest of the world today than it has been since it was a colony of Great Britain. So the reality is we are all being affected by these two sets of treaties. And since labor unions are not present at the table, consumer groups are not present at the table. The public basically is not present at the table. It is the biggest corporations, their most expensive lobbyists, trying to convince the politicians whom they put into office about rewriting the rules. And a quarter of a million German people say, outrageous, we will not abide by these rules. We oppose the secret negotiations. We oppose the leaks about what the deals are that are being struck. This is something that the German people are showing real leadership, and I wanted to bring it to a larger audience. I'm proud to say that the labor unions in Germany were a key organizer and leader. Let us hope that they might get the idea to do the same thing in other countries. Last short update that we will have time for deals with Puerto Rico. I have been talking about Puerto Rico for some time now because it is America's Greece, Greece for Europe, Puerto Rico for the United States, A poor corner of the larger economy which fell prey to big bankers and to corrupt politicians who together arranged for way more borrowing of loans profitable to the bankers and useful for the political careers of the leaders. And so now the problem is this part of the world cannot possibly pay back the loans pushed and taken under the wrong and the most undemocratic of imaginable conditions. Puerto Rico's governor explained this last summer that they can't possibly pay it back. Let me translate that into what he meant. What he meant, and he explained it is that if Puerto Rico had to pay back the 80 or so billion dollars it owes, it would mean that they could not provide schools, fire, police protection, the most basic human rights, and that he, as governor, could not countenance that. Well, creditors went to work. They've heard this kind of story. They want to get paid. They do not want to remember the rule which if you make a loan, it is your job to determine who called doing due diligence. It's your job as lender to determine whether the borrower is a reliable borrower. Because if you don't do that, you risk that the borrower can't repay the loan. And it is clearly understood in the law and in the tradition of economics that I teach that the risk is to the lender, and the way the lender deals with that is to demand a high interest rate, which Puerto Rico has been paying. But that doesn't eliminate the risk. It compensates the lender for the risk. But the lenders never want to pay the piper. They never want to take the losses when the borrower to whom they've lent the money can't pay back. So they have been threatening lawsuits, they have been threatening vilification campaigns. Those have already begun against Puerto Rico, etc. Etc. This last week, the United States treasury floated an idea that ought to terrify Puerto Ricans, and not only Puerto Ricans, but everybody else who pays attention. The treasury idea was that the United States Internal Revenue Service would come in and take over tax collection from the Puerto Rican authorities. With what purpose? In order to guarantee that the taxes raised from the Puerto Rican people, businesses and individuals would be going to the creditors before it goes to maintain the life conditions of the Puerto Rican people. If this were to be done, it would establish that the federal government can and will do what state governments, for example Michigan, does in the relationship with Detroit, namely, control how much of the taxes raised by the people of Detroit will not be used for them. And how much of the taxes of the people of Puerto Rico will not be used for their needs, but will go to service a debt that shouldn't have been contracted in the first place bears watching because the number of jurisdictions, cities and states across the United States in deep trouble about paying their debts. Let me mention, for example, the state of Illinois, which is literally one step ahead of Puerto Rico, if that are waiting to see how this gets played out. The costs to the American people from all of this are enormous. All right, let me turn now to responding to the many questions that you send me. And let me preface this as I should be doing more often by reminding you that we read every single email that comes to us. We really do, and we craft this program, we design how we do it, what we cover, what order, based in large part on what you tell us you like, you don't like, you appreciate, you find boring, and so on. But we get many more questions from you that you would like us to deal with than we could possibly respond to, and we just ask you to understand and be patient. We try, but there's no way that we could answer all the questions we get. It would take more than the entire time that the program has. But every now and then we want to make this part of the program. As I'm about to do this question, and I want to thank Eric for sending it in. This question has to do with economic planning, and Eric asks, in view of some comments I made in an earlier program, isn't it the case that economic planning, rather than using the market to buy and sell things, but to plan instead how goods get produced, to plan how goods get distributed from one producer to another, from producers to consumers, and so on, isn't that a proven failure? In other words, weren't there, for example, in the Soviet Union, many photographs of people standing in line at supermarkets or other kinds of stores, unable to buy the things they needed and wanted? And wasn't that a proof that that planning somehow doesn't work? The market is better. And the answer to that is no, it didn't prove anything of the Sort. But that, of course, needs a bit of an explanation. Planning was not the problem in the Soviet Union, nor has it been the problem in China. The problem in the Soviet Union was they were trying to do more things than they had the resources to do. Let me explain briefly in the case of the Soviet Union. The Soviet Union was the first and for much of its history, the only country with a socialist or communist party in control. That meant they were beleaguered on all sides by enemies. If you're not familiar with Soviet history, let me remind you that the revolution happened in 1917. And starting in 1918, four capitalist countries sent armies to invade the Soviet Union to overthrow their new revolutionary government. France, Britain, Japan, and the United States. The United States sent 10,000 troops that landed on Soviet soil with the goal of overthrowing their government. The Soviet Union never landed any troops anywhere in the United States to overthrow anything. So if there's somebody who's got a right to be scared of somebody else, it kind of goes the other way, don't you think? But the point is, the Soviets had from the beginning to spend an enormous amount of their resources on military defense because they were, in fact, threatened. The last Japanese troops did not leave Soviet soil until 1922, five years after they came. So they've had that problem all through their history, before and during the Cold War. The second thing the Soviets had to do with their resources was build up their industry. When they made a revolution, they were a poor, Backward, Agricultural Society. 95% of the people in the Soviet Union at the beginning were farmers. They knew they couldn't survive in the modern world without building up their industries, so they devoted an enormous amount of their resources to the building of industry. Well, if you put together the building of a. And maintaining of an enormous defense apparatus and the building and maintaining of an enormous industrial apparatus, there's very little left for consumer goods. And the shortage of consumer goods has been as long a feature of Soviet reality as there was a Soviet Union. Planning was not their problem. It was the inability to do all the things they might have liked to do, given their pressures and their conditions. A second way to make this point is to show you something that you may not have thought of before. Large corporations. You know, things like IBM or General Electric or General Motors or Microsoft or. You fill in the blank. These are enormous corporations that engage all the time in elaborate economic planning. There's no way to run a large corporation without massive planning. The different parts of General Motors do not buy and sell to one another in a market transaction. They don't do anything of the sort. They move goods and services among the parts of these large corporations according to a plan. And guess what? The planning for a huge corporation is very similar to the planning that used to be done in the Soviet Union or was common in many socialist countries. Because it's the same kind of problem. If you talk to an economist who works for a large capitalist corporation, he or she will tell you that they do glaborate planning and that that's why they're so efficient. That if they had to rely on the market, they'd never know from one week to the next whether what they needed could be purchased in the market, at what price it would have to be purchased, under what condition. They don't want that. They don't want the uncertainty. They don't want the interference and interruptions that markets always present to you. So they go around the market, they buy up their suppliers, they buy up the companies they sell to vertically and horizontally, integrating many firms into one huge firm which is run by an economic plan. When you hear arguments against economic planning, please notice that they come from people who. Who do the very planning they denounce. So how do you explain this? Because the answer is clear. The problem isn't planning. The problem is that to plan for the society as a whole, you have to give authority to the planner. Just like to plan for General Motors. You give authority to the board of directors and the top executives to control and design the plan. And the private enterprise want the government to have that power because they're afraid that with universal suffrage, the mass of people might decide not only to ask their politicians to plan an efficient economy, but they might decide that it ought to be planned efficiently for the people and not for the private profit, the corporations. That's the issue. The denunciation of planning is a smokescreen to denounce a larger role both for the government and for the mass of people's needs and desires, perhaps gaining precedence or dominance over the goal of private profit. That's the great fear of capitalist enterprises and always has been. We've come to the end of the first half of this program. Please stay with us. We will be back in a very short amount of time when we will have a guest to interview. And we'll spend a great deal of time on the courageous and independent journalism that she represents and has been devoting herself to for more years than I can remember. We will be right back.