B (26:09)

Round people wherever you roam and admit that the waters around you have grown and accept it that soon you'll be drenched to the bone. If your time to you is worth saving Then you better start swimming or you'll sink like a stone or the times are changing. I'm writers and critics to privatize with your pen and keep your eyes wide the chance won't come again and don't speak too soon for the wheel's still in spin and there's no telling who that it's naming for the loser now will be later to win for the times they are a changing. Come senators, congressmen please heed the call don't stand in the doorway, don't lock up the hall or he that gets hurt will be he who has stalled the battle outside region will soon shake your windows and rattle your walls for the times they are a changing. Mothers and fathers throughout the land and don't come criticize what you can't understand your sons and your daughters are beyond your command your old road is rapidly aging please get out of the new one if you can't lend your hand for the times they are a changing. The line it is drawn, the curse it is cast the slow one now will later be fast as the present now will later be passed the order is rapidly fading and the first one now will later be last for the times they are a changing.

A (29:15)

Welcome back friends, to the second half of Economic Update for today. I want to turn today to a number of important basic issues in economics that demand our attention. The first one picks up from the first half of today's program to talk about public higher education that is at the end of the first Half. I mentioned that in the state of Massachusetts there was an effort back in 2008 and it's renewing now to tax the endowments of super rich organizations, mainly colleges and universities that have more than $1 billion in assets. That means the Harvard and MIT and the monster institutions, there aren't very many of them that have amassed an amount of wealth that is literally spinning out of control. And the people of Massachusetts are determined to tax that as a way of redistributing wealth from those at the top to everybody else. And the rationale for that, in case you're wondering, is that the last 40 years have seen a redistribution of wealth from the middle and the bottom to those at the top. I've gone over those statistics many times. I'm not going to repeat them here. The gap between rich and poor has grown larger. Another way to say that is we wealth has been redistributed. So there's less of the total wealth of our society in the hands of middle class and lower class people and more and more of it concentrated at the top. Putting a tax on billion dollar endowment big universities like the millionaire tax imposed that they're debating imposing in Massachusetts that I talked about in the first half hour. These are attempts to redistribute in the other direction. It is a mistake to see these efforts as oh my goodness, we shouldn't do redistribution. You can't have it both ways. If you don't want to redistribute wealth, then you should protest now. And you should have been protesting for the last 30 years on the way the capitalist economy of the United States worked. But because it was redistributing wealth from the bottom and the middle to the top. You can't oppose redistribution only when it goes in a direction you don't like and not when it goes in the direction where you're the beneficiary. Or at least that's not a logical or ethically defensible position. It is, however, the position of conservatives who seem only to be worried about redistribution when it goes against their patrons. That is something to wonder about. But that's not really my major focus. My major focus is to make everyone aware that while there are rich universities with endowments that they don't want to pay taxes on. What is happening to public higher education? The colleges and universities maintained mostly by the 50 states in the United States that are available for the folks in the middle and the bottom public higher education institutions are cheaper, often quite significantly cheaper, than their private counterparts. And that is because they are sustained by tax money. They are public. And let's make sure we all are on the same page here. Three quarters of the students that go to colleges and universities in the United States go to public institutions. Higher education is a predominantly public institution, a public enterprise. For those of you who think we live in a private enterprise economy, this may come as shocking news, and I want to be the first to congratulate you on having finally heard it. So if most people are educated in colleges or universities in public institutions, how are they doing? We know that the rich private ones at the top are doing smashingly well and that all of them are united in the notion that they shouldn't be required to pay any taxes at all. Well, the story on public higher education is grim. We are living in a time of higher education downsizing. Oh, yes, I'm aware that many schools, universities and colleges, public ones, are busy telling everybody they're streamlining, they're updating, they're modernizing, they're shifting, they're becoming more user friendly, they're becoming more modern. And all of that is. I'm trying to be polite here, froth public relations blather. The reality that that is meant to cover over is the reality that they are downsizing. And even that's an unnecessary word. They're getting less money. The states in this country are shortchanging public higher education. The money crunch caused by capitalism's breakdown in 2008. When you throw millions of people out of work and they therefore don't earn an income, and they therefore can't pay income taxes, and they don't have the money to make the purchases they used to. So the sales taxes coming into the government shrink. When you have an economic downturn on the scale that we've had since 2008, the revenue coming into state governments is much less. What do they do? Well, one of the things they do is spend less money on social programs. If they're conservatives, they try to make a virtue out of that. Look at the money we're saving. As if there wasn't a question to be what are the social consequences of saving money? They often act as if saving money is some inherently good thing to do, which is something real close to stupid. I'm going to give you an example from public higher education. Did the states cut spending since 2008 on public higher education? You bet they did. There's a very important research group in Washington, D.C. i've mentioned it before. I'm going to be relying on their statistical work in the next few minutes. Talking about public higher education. So I wanted to let you know where you could go to look up this information yourself. The institution is called the center on Budget and Policy Priorities, CBPP and you can find them on the web at CBPP. January 28th, Michael Mitchell did a report on higher education funding cuts state by state. You can actually look up your own state and see exactly what happened to you as well as what happened in all 50 states. I've done that. Here are the summary findings of what the states did when the capitalist meltdown cut their revenues and and they decided to respond not by taxing rich people, not by taxing corporations, but by cutting spending on social programs and in this particular case, on public higher education. Out of the 50 states, 47 cut spending per student. The three states out of 50 that didn't cut spending per student were Alaska, North Dakota and Wyoming, three of the most partially populated states in the country. The cuts in the other 47 states out of 50 were significant. Average state spending per student fell $1,805 per student per year. That's a cut of 20% in how much money the state allocates per student to support higher education. Because the state cut, the costs to students went up. Annual tuition at four year public colleges since 2008 rose by $2,068 per student per year, 29%. So let me be real clear here, so there's no mistake. In a period that is one of the most difficult economic times for the American mass of people, the middle class and the lower class of our people by income, terrible times. Since 2008, millions of our fellow citizens lost their jobs. Millions of them saw their jobs, lose benefits, losing, lose job security, lower wages. Millions of our young people couldn't get a job at all. Millions lost their homes. Really difficult time. In that difficult time, the states of this country lowered the support they gave those people in terms of funding. One of the few ways they could make a living in the years to come, get a job, get a decent income, namely getting an education. They added a burden to the families of our people of $2,068 per student per year. At a time of economic difficulty for the family that pays for this. You are savaging the place where three quarters of our young people get their education. At the beginning of this program, I talked about the growing importance of China in the world economy. The United States doesn't sit on top of the world economy the way it did 40 years ago, 50 years ago, 30 years ago. We now have to compete in a world economy and nothing is more indicative of whatever success we can hope to have than the quality and the quantity of people going to get higher education at the place where most Americans get that, which is in public colleges and universities, and those are being savaged by cuts. We are shooting ourselves in the foot as a nation. That's how the capitalist system of this country works. It's not efficient, it's not effective, it's not fair, and it's self destructive to boot. Last point. The quality of education falls because the governments support education less. It doesn't get more modern or updated, it doesn't have more computers. It falls. And when students have to come up with $2,000 more per student per year, they have done what of course they had to do in hard times, which is to load up on debt, which means the rest of their lives are going to be spent pinched in a dozen ways by the debts they carry and the interest that's piling up and the penalties that are added to means. Millions of young people are going to decide to take a job, not that they love, where their creativity and their productivity will be high, but a job that they don't like anywhere near so much because they've got to start getting income to start paying down the debt that's accumulating. They're choosing not to get married, they're choosing not to have children. Gee, isn't it interesting? The very same conservative forces who talk endlessly about family values are the same ones cutting the allocation to higher education that makes young people decide not to have a family at all. That's the least of the contradictions of a system that does not work. And the sooner we get over our hesitance about facing that, the sooner we'll come up with alternatives, solutions. But I'm not done with this education. The public school teachers in Chicago are moving again. They had a tremendous strike in 2012, a strike that the Chicago Teachers Union won. And now the school system hurt by the economic downturn of, of 2008, that the leaders of that state did not manage well at all. So they don't have enough money now to run neither the schools, nor the city, nor the state. Well, let me be careful here. They don't have enough money if they don't tax the rich. Illinois is a very rich state. It has lots of big rich corporations and, and big rich individuals. It could tax them on the grounds that they've been doing real well the last 30 years. They're the ones who can afford it most. They're the ones who've done the best. They're the ones who maybe now ought to kick in what's needed to keep this society from breaking down. That would require them to foot the bill for. For a decent school system in Chicago. It serves 400,000 students. The Chicago school system, we're talking a major educational institution, but they're not. Mayor Emmanuel Rahm Emanuel and his school's officials are proposing cuts. Hundreds of millions of dollars in cuts. This is a school system that had a kind of strike or job action a few weeks ago that I reported on because schools are falling apart because rats and rodents and painting is painting, chips are coming off, et cetera. This is a school system that isn't up to snuff already and it wants to make cuts. Damaging the quality and quantity of education makes this country worse. Makes it harder to solve our economic problems. It is an unintelligent, uncreative and fundamentally unfair policy. It protects the wealth of those who have the most at the expense of everyone else. If that sounds like what I talked about in the first half in terms of the Irish banks, good, then I'm being clear. Massachusetts won't tax, although maybe now they will wouldn't tax back in 2008, the multi billion dollar rich universities. So the rich universities continue to be as rich as they are. 37, I believe $38 billion is the endowment of Harvard. Spectacular. They're protected. But the public schools, colleges and universities, they're cut. And the children in Chicago, they're cut. That's what this all is. It's all an austerity policy in its hundred forms. Take care of those at the top. Even though they've done best in the last 30 years, even though they are richer than they've ever been, even though these taxes on them wouldn't stop them from still being rich. Just not quite as rich. Wow. We live in a society in which those people cause most of the problems and then are exempted from suffering the results. That's our job. If you accept that, it will continue. If there's any lesson history teaches, that's it. Let me turn now to also dealing with a topic that so many of you have asked me to deal with and that I will spend a little bit of time on, but not quite as much as you might have hoped. This has to do with the monetary system of the United States. Money. It is a topic that has always mystified people ever since money was invented. Where does it come from? Why is it worth what it is? What makes a piece of paper served this way and so on. So let me try to cut through it and get to the essentials. What is money? Money is a means we have to buy things. It serves some other purposes. It's a way of storing our wealth. We can hold money and put it in a box or put it in a bank, but mostly we use money to buy things with. And it's sort of magical, if you think about it. We take a piece of paper. That's what money is nowadays, a piece of paper, sometimes a coin, but mostly it's a piece of paper. And we give that piece of paper to another person, who in turn gives us something substantial like a hamburger or a haircut or a piece of software or an ice cream cone. In other words, to sort of magical. We give them a piece of paper and they give us the product of labor. The piece of paper wouldn't take much labor to produce a piece of paper, but it takes quite a bit to produce a software program, a haircut, a hamburger, or an ice cream cone. Money is these pieces of paper. So here in the United States, for example, the major kind of paper that serves as money is actually the check, you know, that you get from your bank. You write checks. Checks are a major form of money. They're pieces of paper. You write your name, you write an amount of money, and you go out and you spend it. Another piece of paper is a piece of paper you don't actually see kind of. But it's really the same thing. It's when you use a credit card, you give a merchant, a person, you're buying something from your piece of plastic, they run it through a little machine, and you don't see it right then and there, but paper is moving around. A piece of paper shows up at your bank letting them know that you've used the card and you now owe the bank money. Because the bank on a piece of paper lets the merchant know that they're giving your money to him to pay for what you just used that card for. And at the end of the month, you get a piece of paper, you know, your monthly statement. Some of you do that electronically on a screen, but it's still, for many of us, done with paper. Money is either paper or a screen version of that paper. And then there's the money that the government produces. They also produce money. That's the actual green bills that are in our wallets less and less because checks and credit cards are taking more and more of the money business. But we still have quarters and dimes and nickels and $5 bills and that's the government producing money. So the private sector banks produce money, physical paper, electronic representations of paper via credit cards, checking accounts, and the government produces the green bills and so on. That we see. That's money. That's how money is created. No mystery. No outside authority controls it. The banks can issue as much money as they want to. Here's how it works from a bank, how the banks do it. You go to a bank and you say, I'd like to have a loan. $50,000. Okay? The bank says, looks at you, studies your situation, and let's say for the moment, it agrees. How does it work? It simply creates an account at the bank for you and says, presto west. Oh, you've got $50,000. That's how the bank creates the money. It gives you a checking account. You can start writing checks or using your credit card and using the 50,000 they just created for you to go out and buy things. They have created money by giving you a loan. Wow. That's how it works. That's how it works. Banks. And you know why banks do it? Because when they give you a loan of 50,000, you've got to give them back the principal, the 50,000 loan they gave you, plus an interest rate. That's how they make their money. So they have the incentive to pump out the loans. Because what you pay back above repaying the loan is the income for the bank. That's what pays for the building to be there. That's what pays for the computers, and that's what pays for the lollipop that the clerk at the bank gives your daughter when you visit. Banks create money. And all through the history of capitalism, because banks create money, it has become a constant problem that they do so irresponsibly. What does that mean? They give loans to people who can't pay it back. Well, you say, why would they do that? Well, they're hoping the folks pay it back. They're afraid that if a person comes for a loan and they don't give it to them, then go to another bank and do it there and the other bank will get the interest. Capitalist competition leads banks to constantly lend money. But since that's not all banks do, they also accept deposits. If you have some money, the bank will keep it for you. And you do that because you're confident that you can go to the bank and get that money out. Right. That's why you put it in. Well, what does the bank do with the money you put in? Lends. It lends that out too. It lends out the money that's deposited, and it lends out the money it literally creates. And what happens if people don't pay it back? Oh, my God. Then they don't have money. They've lent it all out. It's not coming back. People default. Then they can not only keep going, they can't give the money back to the depositors who freak out because they thought they were safe. And banks did this all the time. That's why we have things in our history called bank panics and money panics or runs on the bank. That's when people hearing that the bank had made loans it couldn't collect on, because banks are always doing that, worried that they might lose their deposits and ran to the bank to get it out. This is chaotic banking. Always was. This could break down. It always did. So eventually, in capitalist economies, an agency was set up, a central bank, to try to control this a little bit. The banks didn't want to be controlled, but they too worried about it spinning out of control. So we have the bank of England, the bank of France, and in this country, the Federal Reserve to kind of monitor it, to control it a little bit, work it all out with the banks. Don't squeeze them too much. Give the banks a lot of say on what's going on. Sure. That's what we have. We have a banking system that is partly governmental and partly run by the very banks that are being supervised. And if you worry that there might be a problem with having an agency on which the banks sit, who are the ones being supervised, that there might be, heaven forbid, a conflict of interest, Good. Now you understand how and why it was that the Federal Reserve was. Didn't figure out that we were building to a boom, that it blew up on US in 2008. Why didn't they see the subprime mortgage coming? Why didn't they take steps to deal with it? Why are they so incompetent as to let such a collapse of capitalism happen in 2008, especially since it's so similar to what happened in 1929. And we know how bad that was. And you might also wonder, gee, they haven't been doing real well since 2008. Yeah, the folks at the top have done real well. The stock market's okay, banks have recovered, but for the mass of people, not so much. And now here we are, early in 2016, the Federal Reserve finally decided to raise interest rates, and our stock markets are going crazy, and our economy looks like it's shaky again. Is the Federal Reserve in charge? Yes and no. It's a mess. Banking is a mess. This is no way to run a monetary system. The banks are all in it for the profit. It's really like that drug story in the first half of today's thing. Money is too important to be subordinated to the profit strategies of individual banks. That's why the supervision doesn't work real well. That's why the periodic explosions and meltdowns happen. The people who sit on the top of this system don't care. They want it to work a little better, but they don't want to change the system. That's up to the rest of us. If you think the monetary system is under control, you you're not paying attention. It's always been out of control periodically. It's not explosive. But that never lasts very long. We'll return to this subject in future programs. We've come to the end of economic Update for today. I want to thank our partner, truthout.org, that remarkable independent source of news and analysis. Check them out@truthout.org and please, as always, share with us. Share with other people what we do on this program. Make use of our websites, follow us on Facebook and Twitter and let us know what you like, what you want and what you don't. It is a pleasure to produce this program, but it will work better with your participation. I look forward to talking with you again next week. For the own of the road, baby they ain't gonna change. Baby your time now baby baby but after a while Going to be my time my time babe Thing going to change. Thing going to change yes, it is. Sam.