← Economic Update with Richard D. Wolff
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Sam. Sa. Welcome, friends, to another edition of Economic Update, a weekly program devoted to the incomes, the jobs, the debts, the futures for our kids, economically speaking, everything having to do with the production and distribution of goods and services, because that's really what the economy is. 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 in New York City. This being the end of 2015 and the beginning of 2016, I want very briefly to thank all of the people who work with me, Richard, Brian, the folks who helped make these programs happen, but many of the others, Maria and Mike and Shane number one, and Shane number two, and Betsy, and really all of the team that get together here to produce these programs and everything else that democracy at work does. I also want to thank truthout, been a partner of ours from quite a while back now, and urge you, as I always do, to visit truthout.org, a remarkable independent source of news and analysis. I want to draw your attention also to these websites that we've developed, updated and improved, particularly in 2015, rdwolf, with two Fs.com and democracyatwork.info both of those websites are really chock full of useful materials connected to what we do on this program. Available to you to use 24. Seven, no charge at all. There's a newsletter, also free, that you can sign up for that keeps you in touch with us. The websites allow you to communicate to us what you like and don't like and what you would like to see from what we do. Allows you also to follow us by click of your mouse on Facebook and Twitter. We post there the youtubes that we make and use all year round. And also finally to invite you, as we always do, to get in touch with us through the websites either if you know of a radio station that we might add to the 50 that already broadcast this program every week. We're always looking to expand. We have people waiting to follow up on any leads you can provide us in terms of existing radio stations, community stations, public radio stations, college and university stations, whatever. And finally, I do a good bit of public speaking. I love going around doing that. You can meet me. I get a chance to meet you and the people that follow this kind of program. If you're interested, if you have a way of proposing or arranging a speech, get in touch with us. We will follow up literally right away. So thank you also for being a wonderful audience. The flood, and I mean flood of emails you've sent us invitations, help with getting us on more radio stations. You've been a wonderful audience, very, very encouraging to all of us here. And in order for us to do this work, we have to get that feedback, otherwise the anonymity of radio and television would be too much. So a lot of thanks all around. We all have a kind of amazing sense not only of being a large and growing community, but of seeing in 2016 a breakout year for people like us for what we stand for, for what we seek to do. And so it's an exciting transition for us from the old year into the new. I'm going to be talking today about two states in particular, Nevada on the west and Massachusetts on the East. You'll see as we go along why these two states loom large in the various topics we're going to go over today. So let's begin. The first update for today has to do with Las Vegas, Nevada, more particularly Las Vegas, number one newspaper. Indeed. It's the number one newspaper in all of Nevada. It's called the Las Vegas Review Journal. And it got into the news because of an economic transaction recently. The economic transaction was kept rather secret, but then some good newspaper work exposed it. The paper has been sold. And the interesting question is not so much the details of the sale, but it is the nature of the buyer who now owns the newspaper. Well, it's the family of Sheldon Adelson. You may know of him. He's a billionaire, so there aren't very many of those these days. He got his wealth and keeps his wealth by being one of the largest gaming entrepreneurs. That's an extremely polite way of putting what it is he does, gaming entrepreneur in the world. He's also the owner of newspapers in Israel, newspapers that support the government there of Benjamin Netanyahu. And he's also a major funder of right wing Republican candidates for president. Newt Gingrich got his money, if I'm not mistaken, in the last go round. And it's not clear which of the Republicans he's going to be throwing huge amounts of money at this time around. That's what he's famous for. Well, he has come from time to time under criticism. If you're in the gaming business, that's kind of par for the course given that Nevada depends extraordinarily for its economy on that, you get even more attention. And if you're in the newspaper as a major Republican fundraiser and busier around the world and you're a billionaire, well, you can see you become a focus of attention. Evidently, Mr. Adelson didn't like at least some of the attention that he got in the newspapers and including the one in his own state there, the las vegas review journal. So he did what billionaires can do if they're not thrilled with something, they can always buy it. And he bought it. And so Mr. Adelson, probably the biggest businessman in nevada, certainly one of the three of four, now owns and controls the single most important newspaper in the state. If that suggests to any of you listening something called conflict of interest, well, then you're listening attentively, and I congratulate you. There is clearly something wrong if the people who are supposed to be getting the scrutiny of a newspaper buy the newspaper because it suggests, and the evidence is already mounting in multiple newspaper stories, both in the new york times and a number of other papers around the country, that Mr. Adelson or his lieutenants are already, how shall I put it, Influencing or shaping the news, particularly the news that interests them, which as private owners, is how the system works. So that raises then the question, what does it mean to talk about, quote, unquote, freedom of the press? It's hard to have free freedom of the press if that freedom doesn't include being free of economic control. Because obviously one of the motives of Mr. Sheldon Adelson in buying the newspaper was shaping its content. I mean, of course, spokesmen and women may say otherwise, but we will be pardoned for being skipped skeptical on that subject, given what everybody else who's bought newspapers has done when he or she thought it was important to shape the news. There is no free press if the press isn't free of economic control. This would be true no matter who owned the press. This has nothing particular to do with Mr. Adelson. The people who owned it before him put their stamp on what that newspaper did. The problem is we, the public, need a free press if we're going to have any idea of what's going on. And having it shuttle between one private owner with his or her agenda who sells from time to time to another private owner with whatever their agenda is. That's not a guarantee of a free press. It's a guarantee of the opposite. We will get the press that whoever owns it is willing to let us have, and that subjects the majority's need for free, open and honest information subordinates our need as a majority to the tiny minority that owns such newspapers in most cases. Well, am I arguing that we ought to have government control, government production of news through a newspaper? Well, let's think about it for a Quick moment. The government, if it took over newspapers, would at least not be a private owner with a private agenda. That's one thing to say for it. Here's another thing to say for we have some influence over what the government does. We have elections. We can vote out the government we don't like. We can vote in a government we prefer. Granted, there are a lot of problems in the process, but we have some. We have no control over sheldon adelson. We don't vote for him. We can't vote him out. None of that. None of that. The people who are gambling addicts and people his institutions are not free in any meaningful sense of the word. Given the monopolies that are often involved, those who are interested in that activity don't have that many choices to go to. And if it isn't Mr. Adelson doing his thing, it's another equivalent doing his or her thing. So the government gets us free of some of that and puts the newspaper in the hands of people over whom we have some regular, institutionalized review and control. But that's not my preferred direction either. There are problems, lord knows, with giving a government that wants things to be going its way, the control over our source of news. So how could we make it a proper news source? Well, here's the way I would see it and the way that a commitment to a free press would go, as far as I can see. Number one, how about making a newspaper something that is controlled, owned and operated by two groups? Number one, the workers who make it happen, the reporters, the printers, everybody who works to produce a newspaper, the editors, you name it, all of them. They ought to have a democratic worker co op run that newspaper. But there's a second group, and that's the public, the readers, those for whom, at least theoretically, the newspaper is produced. They ought to have some control. So here's an idea. Why don't we make a kind of mixed story of all of this? We will have a joint ownership and operation by a cooperative of the people who work on it and a cooperative, elected, staffed, participating of the people who read it. Users, a customer's, if you like, co op and a workers co op. The two together jointly, each with veto power, deciding what happens to the newspaper. And then if there are disagreements, no problem. If there are notions that there are two or three different perspectives that that ought to be in the newspaper. We don't need to fight that out and live with only one who wins, say, by buying the newspaper. Uh, here's how we would handle that. Produce two Papers, produce three papers. If the cooperatives of workers and customers and readers decide they would like to see alternative perspectives, which by the way, I think most communities would, well then good. Let's produce one daily paper by one another, daily paper by another, and a third one and let them all be distributed. Let people decide which ones they wish to read. Maybe many will read multiple perspectives. And wouldn't that be a contribution to the political and public affairs in education of our people? No minor side benefit that modern technology makes all of that easy. Just as it makes co ops of workers and readers on the one hand able through Internet to contribute, to comment, to control, to vote, to express themselves. We can do this and we can do a lot better than shuffling newspapers from one rich buyer to another. Because you know, if it's only a question of rich people buying them, you'll know that the rest of us who aren't rich will be the ones constantly getting the short end of the stick in public newspaper life. I want to stay with Nevada on the next update. And this is really troubling, I must say. The state of Nevada developed a new program recently called Educational Savings Accounts. And this was supposed to provide the people of Nevada with quality education access. That's the words they used. And here's what it basically is. It's a program in which public money, over $5,000 per year per student becomes available to the citizens of Nevada who want to take their kid out of a public school and send him or her to a private school. Notice the interesting idea here. If you're not happy with the public school, you don't make it better. You don't try to fight to improve the funding for the school, the programs for the school, the access of the family to the school. No, no, no, no, no. Instead, the government is going to use the money it has scarcely been able to raise in these hard times and instead fund you as a public school kid to go instead to a private school. Now let's take a step back. There are societies in which public schools are the only schools that are permitted. Why? It's an old democratic idea. The school is a public service. Educating everybody in is a public service. We do that because we are all better off. The more educated people are. They shouldn't be held back from education by the accident of the family's income into which they were born. They shouldn't be held back by anything other than their own ability, capability, commitment to learn, etc. And so societies provide public education. It was also understood to be a way to bring A society together, to give everyone a shared experience. It was a way to teach people from one ethnic group a lot about the others as they grew up together in school. It was a way to make citizens of one country out of immigrants from many. Public education had many important functions. It taught us to live with one another, not despite our differences, but because of them. To learn the interesting ways other people dress, eat, talk, sleep, pray, sing, and you name it. To develop a rich culture, not a narrow culture. Private schools undo all of that. Private schools are not welcome to everybody. First of all, you have to have the money. Second of all, you have to be acceptable to whatever standards a private school establishes, because that's what private means, that they can do that. They're not subject to the public, democratic, inclusive, open principles that have governed public education. Are there problems in public education? You bet. Are there problems that make the quality of public education way less than it could be? You bet again. But the solution to that is not what the state of Nevada is doing, which is funding the competitive private school, thereby constricting even further not only the funds available for public education, but the commitment of families to improve it. A commitment that will disappear when they move their children into a private school. The Republicans in Nevada pushed this plan through. The Democrats and the American Civil Liberties Union are fighting it. And that's being fought out in the courts as we speak. Next update. Germany and Sweden. In fact, Germany, Sweden, Denmark and Netherlands all have some experiments that are economically interesting that I want to bring to your attention. And as always, I only wish I had more time to do it. First, the one from Germany. And there the credit also goes to Denmark and the Netherlands, because all three of these countries have made experiments. The new German experiment is the one I know about, so I'm going to tell you about it. But as I say, Germany borrowed from Denmark and the Netherlands. They just opened their first bike in Germany. Now their first bicycle, they call it in Germany, autobahn. That roughly translates into superhighway or turnpike in American lingo and so on. It's a five kilometer stretch of what will become 100 kilometers. It will connect when it's done, these hundred kilometers, ten Western German cities of some size and four universities. It is kind of a superhighway for bicycles and it is running along unused old railroad tracks. In other words, they paved over the railroad track bed and made it into a 13 foot wide bicycle highway. It is kept free of the snow in the winter. It has lights along the way so it can be navigated by a bicyclist at night it has passing lanes. It is an extraordinary commitment to bicycle traffic. The estimate is that already the first 5km will remove 50,000 automobiles off of the roads. And it is navigable by electric bikes, which are becoming increasingly popular. What an interesting experiment in going beyond the automobile. And this, by the way, in a country that depends enormously on the automobile industry, like the United States does, but is determined because of the automobiles killing so many people in accidents, injuring so many more, being a major source of air pollution, being a major use of fossil fuels, and a fowler of the air wasting so many material. They have decided in Germany and in Netherlands and Denmark that the bicycle is a better, safer, healthier way. And if the government provides the basis for bicycle traffic the way the government has always provided the basis for automobile traffic, that there will be a massive improvement in the health, safety, lives, welfare of the German, Dutch and Danish people. What's the story from Sweden? Well, the remarkable story is a growing interest in the six hour day. You heard me right, the six hour day. Swedish companies are making more and more experiments. So is the Swedish government in basically shifting from an eight hour day to. To a six hour day. There are many arguments. Some are. Look, email is making people work off the clock after their eight hours anyway, more and more. And the last couple of hours of every day are the ones when workers show themselves to be least productive because they're tired, they've been stretched out, they've been made to work too fast, et cetera, et cetera, so that six hours is better. And for a company that wants a more committed, more determined, more alert, more productive worker, 6 hours is looking good. Are we doing that here in the United States? The question needs no answer. I leave it for you to think about what that might mean. Let me turn now to some of your questions, limited though our time is the first. Some of you wrote to me and asked what happened to the Affordable Care act, otherwise known as Obamacare, when it committed itself to developing health co ops around the country. It set a bunch of them up. Half of them have closed. Why? Because they're not making money, they're not profitable. And Republicans and conservative Democrats have used the fact that, that they're losing money and need subsidies from the government as an argument to close them. We wouldn't have half the industries in this country we have today if when they were young and they were starting out and they weren't profitable, they lost the subsidies that kept them going. It's a very strange argument, only possible if people don't Know the history, number one. Number two, why are they having financial troubles? Because the insurance companies can and do turn people down for all kinds of reasons, genuine and not so genuine. The co ops were not set up to do that. They were set up to be the place where you go if other people can't give you a decent deal or no deal at all. So they took people who had mental and physical problems that cost money to deal with. Either you're going to have a national health insurance that takes care of everybody so that everybody has a reasonable chance if he or she gets sick, mostly for no reason or fault of their own. Either you have that or you don't. And if you do, you understand that some are going to cost more than others. That's the nature of the game. We don't. We pretend in this country that we can't figure that out. We can. We do. We ought to know better. Hospitals in America are having trouble depending on whether or not they depend on Medicare and Medicaid, where the reimbursements are low, or they use people with private insurance or have paid cash. Those are the richer ones. And if you're a hospital that serves one, you're not losing money. If you're a hospital that serves the other, you are. Is that a reason to close hospitals? No. Most decent Americans know that. But if you're thinking profit will help you shut them down, use profit as a standard. Okay, do it. But know what you're doing. You're killing a program that needs help, that performs an important service, and we will pay dearly as a society if we do not. Well, folks, we have come to the end of the first half of today's program. I'm going to begin the second half by answering a couple more of your questions because there just wasn't time in the first half. And then we'll move on to some of the bigger topics that we have scheduled. I want you to stay with us. The break will be very short. And when we come back, as I say, we will have more of what economic update is all about. And I look forward to spending the next roughly half hour with you. Stay with us.
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While you're coming down high street walking in the sun Evening, Diminriz Ohana. She's the one. Jodie, Jodie, baby I am the king.
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And you're the queen.
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Well, it's a long old highway no river I got a Saturday night special I'm back of good I sleep by your door lay my life on the line you have to do no, I'm Gonna make you mad to me to be.
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Welcome back, friends, to the second half of today's edition of Economic Update. When we left off in the first half hour, we were going through some of your questions and I was providing responses as best I can. So I want to pick up because there were really very important questions that were raised, as there almost always are, by your communications to us through the websites. Many of you have asked me to talk a little bit about inflation. There's been a lot of discussion in the news, particularly the last month or two of 2015, about whether inflation was a real risk. Those of you who pay attention know that the Federal Reserve has justified its politics for quite a while now on the theory that inflation was a danger and something that had to be worried about. Conservatives particularly beat that drum quite a bit. And so you've asked me these questions. So let me begin. Is inflation a danger for 2016? For me, the answer is simple. It's an unqualified yes, indeed. Yes, inflation is a danger. But the first reason is historical. Capitalism is an unstable economic situation. It's an economic system that bounces around like the proverbial rubber ball. We are either exploding into inflations on the one hand, or collapsing into crashes, recessions, depressions. Notice all the words we have for this uneven, unstable, oscillating kind of system. So inflation is one end of that. That's when things are spinning out of control, prices are rising, and we have that kind of explosive situation. It's sort of the opposite, if you think about it, of a recession and a depression, because that then prices, if anything, are falling and the situation is one of lost jobs, lost product, and so on. So in an unstable system, you're always at risk of spinning out of control one way or the other. Is the Federal Reserve the agency that's supposed to watch and control that? Yes, it is. It is the job of Janet Yellen and the other governors and folks that work at the Federal Reserve to keep a sharp eye on price levels and to take steps to prevent an inflation either when it's already underway or when they think it might get underway. And that's part of the rationale. Having spent the last six or seven years pumping up the supply of money in the United States to cope with the unstable depression we fell into after 2007, that having done that, having pumped up the money supply, there's an anxiety that all that money could start to chasing the goods and services we have, bidding up their price in the process. And that was part of the rationale for why In December of 2015, the Federal Reserve raised interest rates, having not done that for quite a few years between 2007 and this last month. But the fact that the Federal Reserve is supposed to do something and is geared to do something, doesn't mean it can and will successfully do it. Clearly, the Federal Reserve was supposed to make sure that we have nothing like the meltdown that 2008 and 2009 were. And in that job, it failed. It didn't see it coming. It didn't take steps to prevent it when it began. It didn't make sure it was short when it began. They didn't make sure it was shallow. Because that collapse has been long and deep. And the Federal Reserve has been doing all it can to prevent it from being even longer and even deeper. That's not a record that would make one calmly say, well, nothing to worry about. The Federal Reserve will take care of. It doesn't look like it. So if you're worried that there could be an inflation, you're right. And if you're worried that the Fed might not know how to handle it or might wait too long, you're right again. Well, who gets hurt in an inflation. Well, basically, it becomes a kind of crazy game. On the one hand, you're hurt because the prices of everything go up. On the other hand, if you own something that can get a higher price, well, then you kind of come out even. You. You get more from whatever it is you own or whatever you sell, which could also be your ability to work. So obviously, if the prices go up, say by double, but your job gives you double the income, it's kind of. It's a wash. Doesn't matter. So the damage done by an inflation depends on the risk you have that the things you need to buy go up in price faster than whatever it is you get income from, there's the risk. And so I was struck when an interesting website called Bankrate.com did a nice survey, used some interesting information to talk about what are the big ticket items for different groups of Americans after they pay for their basic food and lodging. We all have to pay for our food, we all have to pay for our shelter. But then after that, what do different Americans buy? And the reason that's interesting is if the prices of the thing you buy with whatever you have left after you take care of food and shelter, if that goes up a lot, the inflation's gonna hurt you. If it doesn't, it might hurt you much less. Here's the interesting thing. They found that I want to share with you for older Americans, people aged 50 years of age or older, the most stunning large expense is medical care. If you're an older person, the big thing that you have to worry about is the price of medical care. And that's something for older folks to think about because medical care has been rising very fast in the last 20 or 30 years. And if an inflation gets underway, that could be a very serious problem for old people. Number two, the Federal Reserve in raising interest rates is going to affect young people, sometimes called millennials, folks aged 18 to 29. What is the biggest ticket item for them? What do they spend money on after taking care of food and shelter? This may surprise you. Americans that age said that their biggest expense outside in food and shelter were student loans. Oh my goodness. This new burden we place on young people, that we will not give them a higher education when without loading them up with tens of thousands and sometimes hundreds of thousands of dollars of debt is now going to show up as a. Oh, because if interest rates go up, the cost of that debt may go up and then they will be hurt very badly. Then there's the wealthy. Third group that Bankrate.com looked at, those Americans earning over $75,000. A big group of them indicated that after food and shelter, their biggest expense was entertainment and leisure. Oh goodness. Going to a resort, buying expensive sports equipment. How interesting. Going out for dinner, taking in a costly theater or movie. And if those prices go up, they'll be hurt. Americans are very different about what they spend their money on and so they will be very differently affected if this inflation that folks are worried about with good reason, materializes in 2016. Let me turn next to a couple of big issues that have come up again, partly through your communications to us via our websites rdwolff with two f's.com and democracyatwork.info the two websites that we maintain and invite you to make free use of. The first item picks up on something I talked about last week and that many of you wrote to me about. This has to do with tax exempt wealthy institutions, places like Harvard, which is what I talked about last time. But what I'm about to say applies again to Harvard, but also to other wealthy institutions. And I begin with two comments. First, I'm going to talk about a new bill working its way through the state of Massachusetts Senate. It's Senate bill, Massachusetts Senate now, not the US Senate Senate Bill 1465 for those of you that might want to pursue research on this, currently working its way through the Massachusetts Senate and here's what this bill says. Any institution of higher education that has an endowment, that's just a fancy word for a fund of money that they've accumulated mostly by contributions by alumni and corporations and others who fed money into these institutions over the years and they've accumulated. They basically took the contributions they got, didn't spend them, and instead invested them. Stocks, bonds, real estate, all kinds of investments. These are called the endowment funds of universities, by far the largest in the United States, by far the largest is Harvard University, based in Cambridge and Boston, Massachusetts. So it isn't surprising that the state of Massachusetts would have this bill. So here's what it says. If you have endowment funds in excess of $1 billion, that's an awful lot. It's a relatively small number of universities in the United States that have anything like that. And you've heard their names, Harvard, Yale, Princeton, University of Texas because of the history of contributions from the oil money in that state and so on. But it's a small number of super rich, and Harvard leads them all. Last time I looked, something in the neighborhood of $36 billion. Places like Harvard really aren't universities with an endowment. They're better understood as an endowment with a university attached because the university is the smallest part of their business. They talk about it a lot and they celebrate it, and they call themselves Harvard, but they are busy running hospitals, investing in real estate, accumulating stock portfolios. They're a big business with a university attached. Well, why is it so important to keep the university attached? Because the university gives them a history and most importantly, tax exemption. They are a quote unquote educational institution. Even though a great deal of what they do has absolutely nothing to do with education, they hold on to their university because it's the only way they could hold on to the exemption. Why did they get an exemption? Why is there an exemption in the law across the United States, both at the federal level and the state of level, for universities? The answer is our history. Harvard, for example. Yale, for example. And they're the ones I know best. And I should admit to everybody here, so that there's no misunderstanding, that I'm a graduate of both Harvard and Yale. So I know what I'm talking about. Because I went to school in these places, I bear them no ill will. But the honesty that's required to face what they do and are is not something I'm going to shrink away from, not with you as an audience, and not when it's so important. Yale and Harvard began as small, tiny Poor institutions. They were set up by the colonial Americans way back when, who wanted to have ministers in their local Protestant churches. And there weren't any ministers around. Everybody was busy scrabbling as a farmer to make a living or a craftsperson or a small shopkeeper, whatever they were. But being a local minister was not something people did. But they wanted to have a Protestant church in their community. Whether it was Cambridge and Boston for Harvard or, or it was New Haven, Connecticut for Yale, it didn't matter. How were they going to get ministers? Well, you have to train a minister. Wasn't easy to get ministers to come from Britain to work here. The conditions were poor, the pay was worse. So they came up with the idea, let's set up a school for ministers, a small school that would have a simple job training ministers from the young people in the community so that they could serve as pastors and so on in Protestant churches. So there would be the community getting the benefit of a minister. And so the idea was to make those schools possible, give them a tax break. The community, say New Haven, Connecticut or Cambridge, Massachusetts and the state of Connecticut and the state of Massachusetts and eventually the United States when we became independent, would say, okay, to help these institutions serve their local communities, we will give them a tax break. That's where it began. That's why it's in. For example, the break for Yale is part of the constitution of, of the state of Connecticut, because it was set up that way even in the colonial times, before there was a state of Connecticut set up with its own constitution. But those conditions have long disappeared. It's one thing to give a break to a very poor institution that serves a locality and a completely different thing to require the city of New Haven, Connecticut, for example, to, to continue to give the same tax break to Yale that is now a multi billion dollar corporation, richer than any person or any institution in New Haven. And none of them are even close. You're not talking about a poor, needy institution, and you're not talking about an institution that serves the local community. Yale proudly announces that it serves the world. It takes students from all over the United States. It takes students from all over the world. The notion that it is in a significant way interested in serving New Haven would make any honest person around Yale laugh. So why do they have the exemption? Because they don't want to pay taxes. They want to accumulate the money and they have the. That's why they have so much money. They've never paid taxes. Let me be real clear. On educational property, which is the Overwhelming bulk of the property owned by Harvard, Yale, Princeton and a bunch of others like that. They don't pay any taxes if they earn income. They don't pay Uncle Sam any taxes. If they earn dividends from their stocks, rental payments from their real estate, interest payments from their bonds, that's income they collect. They don't pay Uncle Sam any taxes. They don't pay their state government any taxes. And they don't pay their local government any taxes. Yale is the largest landowner in New Haven. Over 200 buildings belong to Yale. That's real estate. Private people with a house in New Haven pay tax. They can be poor, they can be rich. They pay tax on the land and on the building Yale doesn't. Which means the people of New Haven have to pay extra taxes to deliver free services to Yale. When Yale calls a local cop, that cop comes in the cop car with the cop equipment. Who pays for the cop's salary? The car, the equipment. The people of New Haven, not Yale. Ditto with the fire department. Ditto with the people who keep the air clean. Ditto with the people who teach the students. The Yale workers who clean the place, who staff the library. They all got a public education. Many in New Haven, they got that at public expense. The people of New Haven paid for the education of the people who work for Yale. But Yale didn't pay for the education of the people it employs. Every private employer in New Haven did pay taxes. So you can see that the very wealth of these institutions was built up in part because they were given a tax exemption. The rationale for which they had outgrown decades ago. It's a scandal. It should never be allowed. It's a way for the richest institutions in our country to get away with not paying their fair share of taxes. New Haven has the highest property taxes of any city in New Haven. In Connecticut. Connecticut has 169 towns. New Haven has ranked number one or two of the highest taxes for most of the history of the state. What's that about? Yale doesn't pay, so everybody else has to pay more. And the tax rates are very high. Half of New Haven is poor African American and Latino American citizens. They all have to pay higher taxes which they cannot afford to deliver free services to, to Yale, which is the third or fourth richest university in the world. That's called Robin Hood upside down. That's taking from the poor to give more to the rich. It is outrageous, and I don't mind saying so. So now let's go back to that bill working its way through the Massachusetts Senate. Here's what it Every institution that has more than a billion dollars in in endowment funds, and in Massachusetts, that would include Harvard and MIT for sure they will have to pay, says this bill, 1% of the value of those endowment funds into the state of Massachusetts to be used exclusively to create educational opportunities for the people of Massachusetts. In other words, what Massachusetts says if this bill becomes law is that you have not paid your taxes to this state for hundreds of years. You've become a multi billion dollar corporation in large part because you never had to pay taxes. You can keep it, but from now on, you have to give 1% of the value of your funds to this state. We don't only want to subsidize you, you have to do something in return. Is this a heavy burden on Harvard? No. Conservative estimates of Harvard's endowment would suggest that they can expect between 5 and 8% of an increase in the value of the endowment every year. So the 1% they would have to give to Massachusetts if this bill becomes law is a tiny fraction of the growth of their endowment. And if a university is committed to education, well, this is a wonderful way to take 1% out of the 5 to 8% growth they'll have each year and actually use it for the educational purposes that Harvard claims it is committed to serve. This is a small effort to correct a huge scandal which is the way we handle huge wealthy private educational institutions. Bravo to the state of Massachusetts for taking this step. Bravo for pushing it into at least a serious conversation. And for those of you who live elsewhere in the United States, do take note, we don't have enough time, but I'm going to begin a discussion parallel to last week's. I spent some time last week talking about what is socialism. And many of you rightly said, you know, we need that to have a conversation about what is capitalism. So I'm going to start it today and we're going to continue it next week. Let me answer this. The single most important thing to understand about capitalism as an economic system has to do with the relationship between people in the process of producing the goods and services we all depend on. Capitalism is the name for an economic system. What is economics about? The production and distribution of goods and services. That's what an economy is. So the particular nature of an economic system has to do with how people relate to one another as they go about producing the goods and services we all need. Let me give you simple examples. There once was an economic system largely disappeared nowadays around the world, although there are Some examples of it still left. We called it slavery. It's a different economic system. The relationship among people involved in producing goods and services was the relationship called master and slave. In that relationship, very peculiar. One, one person, the master gave all the orders, made all the basic decisions to decided what to produce, how to produce, where to produce, and decided what to do with everything that was produced. The master had the right to take a portion of what was produced and give it to the slave whom he made work. The slave did the work, all the hard work. The master, well, he supervised, didn't he? He made the decisions. He did what supervisors do. Master slave not only had this kind of relationship, but the slave was the property of the master. One person working was the owned object of the other. Sort of like an animal, a horse or a. Or a tool, like a plow. Here's another one. Feudalism, the name of another economic system. It's not capitalism, it's not slavery. What was the relationship there? Lord and serf. The serf went with the land, a piece of land. The lord presided over the land. The serf wasn't the property of the lord. It wasn't slavery. The serf had to do what the lord said because he lived on the land presided over by the lord. Capitalism is different from both of those. In capitalism, the relationship is employer to employee. The employee isn't owned and doesn't go with the land. And we're going to pick up next week on the difference between an employer, employee, system, capitalism and the alternatives that are slavery, feudalism, and some others that we will talk about next week. Thank you as always for listening to this program, for doing that all this year, as so many of you have done. I look forward to 2016 when all the people working on this program will get together, as we always have, to produce these programs. The updates, the research necessary to provide you with the kind of insight and analysis that you've come to expect and that we're proud, really proud to deliver. So thanks to all of you. To the team that works with me, please make use of our websites, rdwolf.com and democracy@ Work. Get in touch with us, send us your comments, talk to us about possible trips out there where I can speak to you, radio program connections you can make, follow us Facebook and Twitter, share what we do with other people that might be interested, partner with us. We certainly want to partner with you. Till next week, this is Richard Wolff. Looking forward to our next conversation. Sam.