← Economic Update with Richard D. Wolff
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- [00:10]
A
Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives. Jobs, debts, income, our own, those of our children. I'm your host, Richard Wolff. I've been a professor of economics all my adult life, and I hope that that has prepared me to offer you these economic updates about what's been happening over the last week and sometimes a bit longer. Well, in the very recent past, many of us were affected by two notable suicides in the news. One was Kate Spade, a fashion designer famous for the bags that she developed and the industry that grew up around them. And the other one was the celebrity chef, for lack of a better term, Anthony Bourdin, who was also an author and a travel writer of extraordinary depth and excitement for many, many of us. These were tragic suicides, of course, but they force us all to wonder about our own lives, to wonder about what might have brought these two highly successful, much beloved in their ways, people to make that decision to take their own lives. It prompted me, as I thought about it, to look into what's happening in the way of suicide in this country. Were these isolated events or do they have maybe some more general message for us? And in particular, given this program, where's the economics in all of this? Well, I went to the center for Disease Control, that very important branch of the United States government that keeps track of our illnesses, our deaths, our health, in short. And there I found some results I want to bring to your attention and then offer a brief economic interpretation. The rate of suicide in the United States between 1999 and 2016, that's roughly over the last 20 years, has increased by 30%. That is an astonishing situation. Basically a one third increase in the rate at which people take their own lives. Here are some more information that is relevant. One half of the suicides occurring now occur by the use of firearms. To give you a sense of how many people we're talking about in the year 2016, which is the last year for which data are available, the number of suicides in the United States, 45,000. That makes suicide the 10th leading killer of Americans. When you take every source of death, only a half of those people had any known, quote, unquote, mental health problems. Half had no such problems that were known. And a good number of those who had known health problems had what most of us would consider to be occasional depression and a variety of other activities and moods that most of us have. So what's going on? The decisions of Kate Spade and Anthony Bourdin are obviously not unique and not Restricted to them as individuals. I would argue the following. We are living in a time when American capitalism, our system, is in deep trouble. Many of the leading industries have moved out of the country. Many of their production facilities continue to move out of the country. The new center of economic growth is in China and India and Brazil and places like that. As a result, the quantity and the quality of jobs in this country are less and less important to American businesses because they're more and more invested. So somewhere else, as they develop the technology, what jobs, they don't move abroad, they replace people with machines and artificial intelligence promises to take that further. People see all of that. Their sense of economic opportunity is being constricted. The pressures on them, of jobs that are not as secure as they once were, of benefits that have shrunk from what they were once were. The fact that their children, to get a college education, now have to go into enormous debts or put drains on family finances. It's too much and you're putting the burden on too many people with no way out. And suicide is one way people respond. You know, I've talked on this program about the opioid crisis. In a way, that's another kind of death. You don't stop breathing, your brain doesn't stop, but it almost does. We're in a society that is showing us in these symptoms, something is terribly wrong. My next update has to do with the building the housing system in this country. You know, last week I had Bob Henley here and we talked about housing. And I did some work inspired by what he had to tell us. And here's what I discovered. The vacancy rate at the highest level, most expensive apartments, most expensive houses, 13%. The vacancy rate at the bottom end, 6%. We are building houses for the richest of our people, way ahead of what they can afford. And we're under building everywhere else, which is one of the reasons why rents are going up and going up quickly, because there isn't enough housing being built. Because we don't build housing in a capitalist system to meet people's needs. We build housing where and when it's profitable. And you know, building a house, especially a multi unit house, takes years between the planning and the permits and the excavation and the building and the zoning and all the rest of it. So there's always a lag. So when the economy looks good, too many people start the process. By the time the housing comes ready to be sold or rented, it's two, three, four years later when the economic situation will go. You might think that this awareness of this pattern would lead there to be some coordinated planning when it comes to housing, but there isn't, because we don't have the government doing public housing the way we once did. It's all a private gamble for private speculators to decide when and how to build housing. And they build it for the top, where the money is, and we live with the results. Is it a critique of this system? You bet. Here's some good news, and yet one that carries a lesson. A federal judge has granted class action status to nurses and nurse practitioners working at the Veterans Administration hospitals across the country. Why? The nurses and their lawyers argued that for years the VA administration was requiring many of them to do extra work on their own time for no pay. Sometimes it was the innocuous little oh, I hope you can stay available on your cell phone for an hour or so after this evening's end of workday. Or maybe you need to be accessible by email. The reason this caught my eye is that this too is a sign, a symptom of a declining capitalism, when the employer feels entitled, feels enabled to squeeze in this little way, in that little way more time, more work, more effort, more energy, more attention from workers without paying them counting on those workers being under the pressure of economic difficulty. So they're not in a good position to say no or to protest. So they go along first with this little thing and then that little thing, and pretty soon it adds up. And when you sit down with a pad and paper, they're being deprived of thousands of dollars of income that the law actually says they ought to have been paid for the work that they did. And so my hat's off to the nurses and nurse practitioners at the VA for getting together and saying enough is enough. I'm not going to do this anymore, and I'm going to get together with others similarly squeezed in ways that they should never have been to do something together. Later in today's program, you you'll learn about how college students burdened with debts are coming to the same conclusions and beginning to move in similar kinds of directions. The last economic update I have time for in this portion of the program has to do with that perennial issue, money in U.S. politics. And today I want to talk to you about the Uline family, spelled so you get it right. If you're interested in pursuing this U I H L E I N U line family. Well, where does it come from and why is it important? The Uhlein family is an extremely wealthy family here in the United States, which traces the origins of its wealth to the Schlitz Beer Company, Milwaukee. The beer that. Well, I won't bore you. Schlitz was never known for its. Again, I'll be polite. Quality. If you wanted a quality drink and you had a glass of water and Schlitz, it was a tough call, okay, but that didn't make any difference to making the money. So the EW lines take their money and here's some of the things they've been doing with it. One, they believe in the importance of making broad access available to assault weapons. They are deeply opposed to rights for transgendered people. They like to support right wing newspapers, and they were enthusiastic supporters of of Alabama candidate Roy Moore, even after he was accused of sexual misconduct with underage girls. In the lastin this current election cycle, I should say the U lines have already committed $26 million to 60 over 60 candidates in this election cycle. So why am I telling you this? Are they the only ones? Of course not. Are they the biggest donors? No, but they are among the few hundred people who give in the millions of dollars. And that's what I want to talk to you about. The notion of democracy, from its earliest articulations going back to ancient Greece all the way through to the modern United States, has always meant pretty clearly that people are equal in terms of the, say, the role they are to have on the decisions we live with, for example, the people who represent us in the city or the state or the government of the country where we live. We're supposed to have one person, one vote. And that's not just a literal detail. It's the notion that each of us is equal when it comes to making the political decisions because we all have to live with them and we all have to cope with them, then we should all participate equally. Allowing money in politics. On the matter of the Uhlein family makes a joke and is not a good joke about this. There is no democracy if one person can spend $26 million making sure you hear about the candidates they like more than you hear about others who can't raise that money. You learn what the candidates they want you to learn about. Say they can buy expensive advertising. They can pay people to knock on your door to tell you how wonderful this candidate is. You get the picture. Mr. Uline has one vote and I have one vote. But are we equal in shaping this democracy? Of course not. Money in politics is the enemy of democracy and always has been. And if you leave the money in there, you're writing the democracy out. We've come to the end of the first half of the program, I want to invite you to stay with me. I will be talking with Eli Campbell about student debt, and I think you'll find it very interesting. Welcome back, friends. I'm sitting here with my guest for this part of the show, Eli, and I want to tell you a little bit about him. But first, Eli, welcome to the show. Eli is a recent graduate of the State University of New York at New Paltz. There he majored in fine arts, as I recall, digital design and fabrication. But he's really gotten a passion for the whole problem of student debt, of the burden being put on students, on their families, on the whole United States as a society which knows it needs and relies on educated young people for so much of the present and the future of this society. So he's become an impassioned, self learning advocate of doing something and something severe and serious about the student debt problem. And that's why he's here. He's the author of a pamphlet which we'll mention later, but he's someone passionately involved in something that should concern us all. I recently learned, for example, that more than 4 out of 10 students in this country now graduate with debt, and the number is growing and the burden of debt is enormous. So, Eli, thanks for doing this work and thanks for making it available by joining us. Let me begin by asking you about something that caught my eye in the pamphlet that you wrote that you refer to the student debt issue as a strange madness of the United States. What do you mean?
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Well, in these times, we're witnessing what seems to be the collapse of the prevailing orders of the last century. And in that you have these people like Trump and Betsy DeVos who they've gone to such lengths to isolate themselves from the rest of society to preserve their wealth, that they would rather sacrifice the future than let go of their power in the past. And I think about the Words of, of Dr. King, we are always on the verge of being mesmerized by uncertainty, but we must move on. And I think it's so easy to get lost in. You know, there's so much that's going on that is just astounding right now. It becomes counterproductive to even try and catalog all of it or, you know, so. But the madness of these times is that willingness to sacrifice the future. And I think student debt is the perfect example of that. And especially because the idea of student debt is not really known in other countries. I mean, when you're 17 years old and you're signing up for student loans In America, you don't know that most other countries in the world don't have student loans. You don't know that public education in America only two generations ago was, compared to what it is now, virtually free. And you just don't understand the fact that these loans you're taking out, they're not made because the government and Wall street has our best interest in mind. They're made because it's profitable. And that, to me, is the madness of these times.
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All right, let's explore it a little bit. On the one hand, student loan means or tells us that the student and his or her family confront something they think they must do. Educate their family, educate the young people. But what they must do, they can't afford. And the solution is to talk to us about how did we get into a situation like that.
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Well, when you have a society in which profits are more important than people, it's the logical conclusion. You can't, you know, we're failing to plan for the future. And in that, there's. There's no reason for society to be run this way. And if you look at the actual, you know, how we appropriate money, how we appropriate resources, it is designed. It is all part of a plan to collect profit off of students. And one thing that I actually only realized relatively recently, the federal government, and correct me if I'm wrong here, the federal government has been taking in about over $100 billion every financial quarter since around 2010, which is more than it would cost, by the estimates I'm familiar with, to fund all public universities and colleges in the United States for an entire year, just in one quarter, and that's since 2010. And, you know, why is it that the federal government is making a profit on loans that they're giving to students? What is the point of that if not to just make a profit? It's not for students, it's not for education, and we really need to stop that.
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You know, one of the logics that's given by people who defend this is the notion that there's something inherently efficient or appropriate in having an individual student worry about, take responsibility for the payment for their education. And it's sort of remarkable partly because, as you point out a few decades ago, nobody thought like that, or very few people did. It's also remarkable because we teach in America, as an economist I do, that, that the future of the American economy in a world system depends above all on the quality and quantity of its educated labor force. And college and university is where we do a great part of that. And if you make it harder and more expensive for people to do that, you are shooting yourself in the foot. Why would you do that? Or is your answer again, and that would be fine, that it's this private profit ahead of the social welfare that is at the root of this?
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Well, it's about profit for corporations and for the government, but it is ultimately about suppressing the youth and suppressing any movement that would challenge the capitalist system. And from my conclusion from the research I've done is that students actually have a lot to gain from not paying them. And if we were to organize collective defaults on our loans, it could potentially trigger the kind of economic and financial crisis on Wall street that we saw in 2007. Now, people might hear that and say, well, why would we want to do that? But there is a certain strategic advantage, I think, rather than letting the house of cards fall on its own. And then we have the problem of the bank saying, well, we need to get bailed out again, Please, taxpayers. We need, what was it, $14 trillion or something like that. We need our money back. And I think there's a certain strategic advantage if students are to go out ahead of that and say, well, we're not going to pay our loans and if you want to take our educations away from us, good luck, because it's, you know, we've got them. And, you know, it's interesting because it's not like with the housing market crisis where there is this asset that the banks can actually foreclose on and take. They can't take our educations away from us. They can't take our knowledge and our understanding. And I think that is, you know, in all of this, the education is the important part. The degree has become a product that students are forced to buy in order to, you know, succeed in society. When so many of us are pursuing an education in something that we're interested in, but our actual labor and our participation in the workforce becomes something totally unrelated because we have to pay off these extremely high financial burdens. It's a crazy system. And I think rather than wait for the Republicans to die of the many diseases of the soul that they have contracted, or the Republic, the Democrats to grow spines and finally care about what's happening to students and everything else that's going wrong in this country, students should take matters into their own hands and organize this default.
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So, yeah, the word default. I've also heard the word boycott that students are going to. And I understand, and I would like to hear a little bit about you that there are movements already, there are activities where students are organizing in order to do this, to confront the country with the absurdity of putting a burden on something that should be a public benefit, namely an educated population. Tell us a little bit about those and then I want to ask you about some of the problems that kind of a movement has.
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Well, I don't really think there is a significant movement to do this. In the time that I've been working on this, I've talked to a lot of people who are sympathetic and I think there are probably a lot of people around the country who are having similar ideas when they're looking at their monthly bill. But I know that in the Occupy movement there was an organization called Strike Debt, which was in the financial crisis. There were some of these student loan asset backed securities that went bad that Strike Debt would then buy and then forgive the loans within these assets. But I don't truly think there is a movement as of yet that's working on that.
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But you are advocating that there be one. In other words, you want there to be an organized student refusal to honor that particular debt in order to confront the country with solving the problems of education and finance in a different way. Well, let me then ask you a question. I'm sure you have been asked or will be asked. That means any young student who wants to follow your idea, agrees with you, would be taking a personal risk in terms of their credit rating and all the rest if they stopped paying this debt. How do you respond to that concern?
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B
Well, first of all, it would have to be organized. It couldn't just be individuals deciding they weren't going to pay, because as individuals they will absolutely throw everything they have, you know, wage garnishment. There's a number of ways they can really mess with your life if you don't pay your loans. But if the defaults were coordinated so that they occurred simultaneously. From what I've read, Navient is the corporation that I focused on a lot. And in their financial documents they state themselves that their ability to make revenue from student loan servicing is dependent on their infrastructure and being able to actually collect the loans. And I'm not sure if you're familiar with the concept of a DDoS attack, but it's when a server online is spammed with information and it has to shut down because it just can't process all of the requests for information. That's sort of what a debt boycott would do because Navient would suddenly say, well, we've got, you know, 200% increase of defaults this month. And, you know, we only have so many people in our office and you know, what are we going to do? And they're threatening. You know, they have a political idea, too. They're not just poor debtors. They've got an ideology that's behind them. I mean, that would really have an impact.
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I think I noticed that recent statistics suggest that something like 20% of students are now in arrears in paying back their loans. They're having such trouble doing it that you already have a very high rate of default. So that you already have a mass movement towards default. It doesn't call itself that, but the question is it's already happening. Can it be organized would be your next kind of issue. Eli, we've come to the end of the time that we have for this, but I want to ask you to stay on. I want to let folks know that we will continue this conversation and that it will be available the continuation@patreon.com economicupdate that's P A T R E O N where we put economic update extras like this Continuing Conversation and others. And we encourage you to take advantage of that opportunity. And I want to thank truthout.org, that remarkable independent source of news and analysis that has been a partner with us for a long time, and to say not only thank you to them, but to all of you, especially if you too can partner with us by sharing what you've heard here. And I look forward to speaking with you again next week.