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Gonna change one of these days. Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic aspects of our lives. Our jobs, our incomes, our debts, those of our children and those looming as we look down the road into our futures. I'm your host, Richard Wolff. I've been a professor of economics all my adult life, and I currently teach at the New School University and in New York City. We have many things on our agenda today, including an interview that I think you will find extraordinarily valuable and interesting. But I wanted to jump in with some of the events of the last week with which we always open our programs. One of you wrote to me recently and I found it really interesting saying that I talk a great deal about the inequality of wealth and income here in the United States and sometimes in Europe, but I don't talk about it elsewhere in the world. And I thought that was a good criticism. And I wanted to respond to it partly because I want the general point to be understood, that the way capitalism as a system evolves produces inequality everywhere. That's its long term tendency. That's why that book of a couple years ago by Thomas Piketty, the French economist, had such an impact around the world and was translated into so many languages, because it established the basic tendency of the system to produce inequality until there's a backlash from the population and then it gets reversed for a while until the drive, the tendency to inequality, is resumed. So my attention was caught this last week by a story from the Hindustan Times. In India, there was a scandal. And the scandal began with complaints by politicians that the government was using soldiers at the expense of the government to protect wealthy people and in particular to protect Nita Ambani, the socialite wife of India's richest man. Well, that was the clue. And I went and did some research. Her husband is Mukesh Ambani, an oil and gas magnate worth $21 billion. He has actually had a government security escort since 2013, when he was the subject of terrorist threats, somebody says. And he at least covers the costs of the government protecting him, but apparently not the protection of his wife, to whom 10 additional officers had been assigned. Delhi's Chief Minister, Arvind Kejriwal said in a public tweet, women raped daily in Delhi. No security for them, despite repeated requests. But Prime Minister Narendra Modi is providing security to his friends. Well, I did some more research, not so much about the scandal with the security. That's bad enough. But I wanted to understand what it meant that in a Country with literally hundreds of millions of some of the poorest people on our planet. There is a gentleman who has $21 billion. And I found out that Mr. Ambani is indeed quite wealthy and well known. He's an art collector, he's 52 years old. He serves on the boards of directors of companies. But what's really famous about them is that they live in a home in what used to be called Bombay, now called Mumbai. And the home is famous because it is 27 stories high. It contains a ballroom, a movie theater, six parking levels. If any of you listening or watching are interested, Vanity Fair magazine in June of 2012 did a very revealing photo essay on the Ambani home. $2 billion is the value assigned to it. And there are 600 servants who work in this 27 floor building. Wealth and poverty as extreme as it gets. And this time in India, where if anything, one has to wonder about the tolerability of it even more perhaps than in the West. I wanted also to be fair. You know how concerned I am with that. And having spoken about the Republican National Convention and some of the economic dimensions of it in Cleveland, I wanted to turn my attention to the recently concluded equivalent theater in Philadelphia, the Democratic National Convention. The point I want to drive home is the same as I did with the Republicans. Cleveland is one of the poorest, most destroyed cities in the United States and has been for decades. Philadelphia likewise. Let me give you some idea of the reality of Philadelphia, four blocks from the glitz and the glamour and the arena and the television and the well fed people having their debates. Poverty in Philadelphia, in the core part of the city, is listed by the U.S. census Department at 27%. More than 1 in 4 residents of that city lives below the poverty line. If you know what it means to live at the poverty line, you'll know that the word poverty is inadequate to convey the privation you suffer if you do that. Statisticians also in the United States have another category called deep poverty. It's defined very simply. That's if you live at a level less than 1/2 the poverty level. So you are in deep poverty. Philadelphia has the highest rate of deep poverty of any city in the United States. The Democrats chose to make a convention in the depth of poverty as the Republicans did, and neither of them felt it was necessary to say a word about it, to justify it, to explain it. In a recent book that I would like to mention because it gives you an idea of the extent of the poverty that was not discussed at either convention. The authors are Catherine Edin, E D I N and Luke Schaeffer. Katharine Edin is a professor at Johns Hopkins University in Baltimore and Luke Shaffer is a professor at the University of Michigan. They wrote a book last year, 2015, called $2 a Day Living on Almost Nothing in America. Nice title. Edin and Schaeffer published by Houghton Mifflin Harcourt in 2015. One of the interesting things they point out is that the number of children living in deep poverty, that is living in a household that earns less than half the poverty level in this country now numbers 3 million children in the United States. And that struck me because I'm an economist and I think in terms of numbers, 3 million is roughly 1% of the American population. And we've heard a lot about 1% ever since Occupy Wall Street. Now, that 1% is those at the top. But the 3 million children living in deep poverty, that's the other 1% at the other end of the spectrum. Wow. If the 1% at the top deserve our attention and our social criticism, then the least we could do is apply the same to that other 1%. At the other end of the spectrum. However, the Republicans and the Democrats each for their respective reasons and their electoral goals and objectives, chose not to and chose not to deal with it and to pretend that everything is really pretty good. For me, watching knowing how bad the economy is and the problems that it has, between the fantastic make believe of criticism from Trump and the equally fantastic make believe denial from the Clinton quarters, I really am left wondering what are the prospects for a society that needs to pretend either it doesn't have a problem or that it can solve the problem by slapping tariffs on goods from China, building walls in front of Mexico, and other fantastic imagina that are actually more distractions from our problems than serious engagement with them. The next item in our list of shorter updates that we do in the first half of the program has to do with three examples I thought would be interesting to you about unions, trade unions, labor unions behaving in ways that are a little different from what we've come to expect and perhaps give hope that the labor movement having now shrunken in the United States for 50 years without exception, such that today in the private sector, which is the major part of our economy, union membership is now below 7%. That is 93% of people working in the private sector are not members of and are not represented by a labor union. This in a private sector that once had 30% of its people represented by unions. So maybe the unions are Learning finally that they really do have to change their tactics if they're going to survive, let alone become important again in American history. So I wanted to mention three. One, in the United States, two abroad that I think are signs of a changing labor movement. First, the American Federation of Teachers gathered for its annual convention in Minneapolis. St. Paul did some interesting things. First, they marched on downtown and they marched against police brutality. There was the case of Philando Castile, who had been killed by police there. And it caused an enormous upsurge of feeling and conflict. And they wanted to go on record to say that they don't want anyone to be killed, but they are particularly concerned about police violence and in poor communities. And they went on to say, we want more investment in these communities. We can't teach young people if the homes in which they live, if the neighborhoods in which they live, if their whole life situation is an endless threat and danger and a situation of privation. To expect them to perform properly in school is absurd. And to present all these difficulties to the teacher is even more absurd since the teacher hasn't the resources nor the training to cope with a society that's broken down. It's very important that the teachers did that. They marched with others. Some of them were arrested. They were concerned to show that to be a teacher who cares about education brings you necessarily into becoming an advocate for social change when the society as it's constituted makes their job next to impossible. Bravo to teachers reaching out beyond themselves. And in this case, bravo to the American Federation of Teachers. The next example is Canada's postal workers. That's right, the Canadian Union of Postal Workers is fighting with the postal system in Canada. And the fight might interest you as well. It's the Internet, in a sense that's forcing this. More and more people are using email and other Internet communication mechanisms instead of the mail. This means that the mail services are finding less revenue coming in from the mail process and that puts them in some financial difficulty. Now they're responding like a corporation in Canada, much as the United States Postal Service often does as well. So they're laying off people, they're cutting back hours, they're thinking about not doing deliveries at certain times of the day or the week, etc. Etc. To hunker down and of course at the expense of people's jobs and postal workers incomes. And the postal workers union, instead of trying to beg that the cuts not be as bad as the Postal Service wants, kind of working a compromise which they will lose in the long run, have taken a different tack. And that's why I'm talking about it. They are proposing changes in the postal service that would allow their members not only to keep working at the same hours and the same income, but might also provide jobs for many more people. And they have come up with three suggestions, all of which are creative. Number one, well known, because that is done in the United States too. There ought to be in the United States, they argue, what already exists in many other countries. I'm familiar with it. For example, in France. In France, as in many other countries, the post office is also a bank. It's a place where you can have a savings account. It's a place where you can have a checking account. It's easy to get to because the post offices are all already there. There's no expensive profit to be made because it's the post office. It doesn't have to earn a profit, doesn't have to charge high prices for the services it provides because it simply has to recoup the cost of providing a service in the building and by means of the workers who already are there. All every day. Banks that would be. In fact, post offices would also provide a way for the government to compete with private sector banks, making sure that they behave properly, that they don't overcharge. Let me remind you, as I have documented on this program repeatedly, that every major activity of the major banks in the United States and I've enumerated them, bank of America, Wells Fargo, Citibank, all of them have been paying fines in the billions of dollars in recent years for money laundering, for overcharging during the mortgage crisis, for manipulating interest rates, the so called Libor scandal, for manipulating foreign exchange rates. Literally every area of banking, these large banks have been exposed as behaving either illegally or unethically, both. Why are we protecting them whether they're in Canada or here? By not having a competitor who might stop some of that behavior coming out of a post office. Not only that, in large parts of the United States, banking is not available. Banks don't get enough money out of having a branch in a small community. The post office is already there and has been would be an easy way to provide checking and savings accounts to millions of our citizens in Canada, in the United States. Good idea. Creative for a union to put it forward. But they're not done. They thought that the post offices could become all over Canada, a center for greening the country. A place where people would gather to develop projects to improve insulation of homes. In other words, it would be a center for a nationally funded program to improve the interaction between the Canadian people and their natural environment. What a creative idea for how to solve a problem. Not to be outdone, they also said that the postal office could be a place where you would be particularly structured to deal with elderly and ill people who are not able to get to the shrinking number of hospitals and clinics in the United States or Canada or, or many other countries. So that the post office could become a community center for a variety of valuable projects for local people. Not to do this in the name of the private profit of the banker or the private proper profit of the medical industrial complex would be to put profit ahead of people's needs. And that's a fundamental problem of capitalism now, the past and for as long as we allow it. Third example, this one is about the United Kingdom. In the United Kingdom, something interesting happened that I have been reporting on because it offers some arresting parallels to the whole phenomena of Bernie Sanders here in the United States. An elderly fellow rather like Bernie in England took steps from a point of view rather like Bernie's. His name is Jeremy Corbyn and I've been talking to you about him. The difference is where Bernie Sanders came in second. Rightly or wrongly, we probably will never know. Mr. Corbyn came in first. There was a race to become the head of the Labour Party in England and he won about a year ago and he became the head of the Labour Party. That would be the equivalent of becoming the head of the Democratic party in this country. It is the left of center, major other party in the United Kingdom after the Brexit vote, the vote where the British people voted to leave the European Union. The Conservative part of the Labour Party, who has been very angry that Mr. Corbyn and the mass of young people he brought into the party were able to win and become the leadership. The Conservatives, which include the majority of the members of Parliament from the Labour Party, saw their opportunity to, to counterattack and undo Mr. Corbyn and they called for him to step down. He had supported the side in that vote in England to stay in the European Union. He hadn't supported it with much enthusiasm, but he had. So he came out on the wrong end of that vote and that was the chance of the Conservatives. Why am I telling you this? Because Mr. Corbyn chose to fight back. He chose not to step down in the name of the unity of the Labour Party. No, no, no. He is standing to win the next election to see whether he can keep his job as the head of the Labour Party. Calling on all the hundreds of thousands of young people that joined the Labour Party in order to see it go in the direction that he represents, a direction very close to the perspectives of Bernie Sanders, by the way. And now the interesting thing, the labor unions of England, not all of them, but most of them, have come out foursquare in support of Mr. Corbyn and against the right wing of the Labour Party as represented by the majority of their members of Parliament. That is a split in the Labour Party that we should watch because it will give us a very strong clue as to whether the splits on that side of the political spectrum, both here and in places like England, where they're tending to take us. Because what is happening over there is not so different from what is happening here. It's not a coincidence that we have Bernie and they have Jeremy. It is something going on across the board. Quickly, in the time that remains, let me give you a couple more short items that I think are worth talking about. Starbucks got itself into some trouble this last week as large numbers of its employees took to the Twitter and other methods of social media communication to complain about cut hours for workers there to complain about jiggered schedules that didn't get presented, let's say, to the workers for them to have some say in, after all, what changes their lives. And Starbucks at first denied it, but then the flood of people saying that this had happened to them, people who worked for Starbucks, made it difficult. So here's how it was resolved. Did Starbucks step back from damaging its employees with changes in schedules and hours? No. But what it did do was to decide to drop its policy, which I didn't even know about. Maybe some of you did. It turns out if you worked for Starbucks until now, you could not dye your hair. You had to work in a particularly colored hair and particularly colored pants and shirt. And Starbucks clearly, although of course you wouldn't know unless you're privy to their internal documents. And I don't know, maybe WikiLeaks will give those to us soon too. But until they do, I can only guess that allowing people now to express themselves this was the language of Starbucks communique in any way they wish. By choosing their own hair color, you could give workers something that costs you nothing in order to be able to perhaps get away with fooling around with the hours, which is a matter of making more profit. We'll keep track of this and let you know. Last item for which we have time. Today, 2016 is the 100th anniversary of the federal estate tax in the United States. In 1916, for the first time, we passed a comprehensive federal estate tax. And let me make clear to everybody what that means. It means that when you die, you leave whatever wealth you've accumulated in your lifetime to whoever you want to pass it to, usually members of your family, your children and so on. That a tax is assessed. A portion of your estate, the value of the property you leave is taken by the government. And what's the rationale for that? Usually there have been several. One fairly obvious. The government needs money. The history of the estate tax is not coincidental. The reason it was passed in 1916 was we were fighting World War I, and it was turning out to be much more expensive than anyone had thought. And so the estate tax was one way to raise the revenue for fighting World War I. But that was not the only reason. There's an old idea behind the estate tax, and sometimes the idea gets expressed as follows. There ought to be a level playing field, the argument goes. Everybody who's born ought to have a roughly equal chance to develop their capabilities, to find out what their capabilities are, and to do as much with their capabilities as they can, and that they should be rewarded according to the merit they acquire, the skills they develop, the commitment they show, all of that. There shouldn't be an unequal playing field. That is, some people shouldn't start with way more help and resources and equipment and all the rest than others because of the notion that that would be intrinsically unfair. And that means some people can't leave to their children millions while other people are living in a slum, because that's not a level playing field for anything. That was the point earlier in discussing the logic of the AFT in Minneapolis doing what it was doing. So an estate tax is at least a step in the direction because it is almost always set up, graduated. So the richer you are, the bigger the bite out of the estate tax that the government will take. Now, lest anyone here get all excited about the estate tax, it never took very much from the American people. It never took very much from the wealthy. At its peak, it took. It accounted for, excuse me, 2% of the federal tax revenues in this country. So the 98% was taken from the income tax and all the other forms, but it was a significant amount. 2% of the United States government's take is a large sum of money. And so it was in force pretty strongly from its inception in 1916 until the end of World War II. End of World War II marks the end of most progressive taxation in the United States. We've been rolling it back ever since, both Republicans and Democrats. The Republicans with glee, the Democrats with hesitation. But they all do it, and they've all done it the same way. And so the estate tax has been cut back. So much so that I thought you might be interested in how. In fact, we are celebrating the hundredth anniversary. The state estate tax now allows you to pass more than your first $10 million worth of assets to somebody, and you pay no tax at all. In other words, the first 10 million are exempted for everybody. Well, guess what that means. It means that currently point 2% of people who die pay any federal estate tax at all. In other words, the vast majority of Americans have no federal estate tax, and it currently accounts for point six percent of federal tax revenue. We've gutted it. That's the simple story. We've gotten rid of it. It's a tax that targets those most able to pay the tax. It's a tax that. That takes relatively little from people who are still left after they pay it with enormous wealth. And it does a little bit to level the playing field. But even that little bit was too much for those at the top. So they got to work to pressure political leaders, Republican and Democratic alike, to do away with it. So in the 100th anniversary of the estate tax, it's barely visible anymore, which is a remarkable way of noting the hundredth anniversary. We've come to the end of the first half of our program. I want to thank you for being with me. I want to ask you, please to stay with me to remember the two websites that we make available to you 24. 7@no.rdwolf.com and Democracy at Work. All one word. Democracy at work. Stay with me. We'll be right back.