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Sam. Saint gonna change. Welcome, friends to welcome to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives, our jobs, our incomes, our debts, those of our children and those looming down the road. And boy, do they loom these days. 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. Before jumping into the program today, let me make a couple of brief announcements. The first one is to remind those of you either in the New York metropolitan area or who might be visiting at this Christmas season time that once every month, the second Wednesday of every month, I give a public lecture. I'm very proud and pleased to be able to tell you about it as I have in the past. This lecture occurs at the Judson Memorial Church, one of the oldest churches in New York City and the only church facing the Washington Square, the historic square in downtown Manhattan. The next one of these public lectures will take place on Wednesday, December 14th at 7:30pm Judson Memorial Church, Washington Square. It will be devoted to an analysis of what Mr. Trump has said his economic plans for all of us are and where they're taking us. If you're interested, please join us. It's a chance for me to meet you and vice versa, and in a setting that allows a greater exploration than the time constraints of the radio program usually allow. So once again, monthly meeting for December on the 14th, 7:30pm Judson Memorial Church on Washington Square. And the other announcement is also perennial here, which is to remind you that if you find what we do on these programs interesting, all of them are archived. Every program we've ever done on our website, democracyatwork.info that's all one word, democracyatwork.info and the second website that we maintain, RD Wolff, with two Fs. And in addition to an archive of all these programs, there's a great deal of material added all the time to these websites that I think you will find interesting. You can also use the websites to communicate to us. Both of them have mechanisms for emails to be sent to us on anything you would like us to deal with on these programs. What you do and do not like about the work we do with, we read them all. They are very important in shaping what we do. The websites also allow you to follow us by a click of the mouse on Facebook, Twitter, Instagram, which is where we concentrate our linkages to all of you, etc. Let me ask you to make use of these websites There are ways for you to partner with us and vice versa. And it extends the reach of what we do to let other possibly interested folks that you know become aware of and hopefully partners with us. And the same applies to contacting us about radio stations that you think we might pursue to carry this program and likewise to engage with us about having me visit where you are to meet you there. Okay, let's jump in. And we have so many today that I'm going to go kind of quickly through this first half of the program. Well, I'll start with one of the things the President Elect Trump has said he's going to do, and that is going to get rid of the estate tax in the United States. Now, the estate tax is something we've talked about before, and I want quickly to tell you what Mr. Trump is planning. The estate tax now is, at the federal level, a tax that affects a tiny number of Americans way less than 1%. So we're talking about an infinitesimal minority. Why is that? Because the federal estate tax exempts the first $10.9 million that you leave to your chosen descendants, your chosen friends. So if you don't have more than $10.9 million, you don't care much about the federal estate tax because it doesn't apply to you. That's why it's only a tiny, tiny percentage. However, that tiny percentage of the American people that have more than 10.9 million to leave to their descendants and their family and friends, they are extraordinarily rich. So that, for example, in the last full year for which we have records, the amount of money collected by the federal government on the estate tax of those who leave, more than 10.9 million was $21 billion. That's a significant amount of money. So if you get rid of the estate tax altogether, as many in the Trump camp want, you are not only making the rich much richer than they used to be by removing a tax on them, but you are also depriving the Federal treasury of $21 billion so that either the federal government will have to raise taxes on the rest of us to make up for what they're not collecting from the super rich, or they can cut social programs for all of us because they don't raise that money and they've lost it from the super rich, or maybe they can borrow the money and worsen the deficit. You, you see the issue. But now a couple of specifics. If you're rich Enough, if you're one of the.001% of the people who have more than 10.9 million to leave when you die. Here's what you pay if you have more. 40%, current law, 40% on every dollar over 10.9 million for a married couple. One of the proposals in the Trump camp is to substitute the capital gains tax. Now, if you hear that, well, we're cutting the estate tax, but we're going to apply the capital gains tax. Don't think that it's a wash. Don't be fooled by this kind of talk because the capital gains tax is much lower on these people than the estate tax. The capital gains tax currently would be 20%. So for every dollar over 10.9 million, if this arrangement of the Trump game goes through, it's still cutting in half their tax bill from 40% to 20%. When Mr. Trump campaigned to do something about inequality, maybe what he meant is to make it worse, because that's what this will do, whether it's altogether cut or whether we substitute a 20% capital gains tax for a 40% estate tax. Bottom line is the richest among us will become much richer than they were before. Number two, I want to talk to you about some of the typical wastes of a capitalist economic system that often are not recognized for what they are, bizarre activities, but they happen every day. So while they're bizarre in ways I'm going to tell you about, they are also normal routine every day. And I'm going to just give you a few samples that became clear this last week. To drive the point home, United Airlines announced a first. They are going to charge for what you put in the overhead bin above your seat. You heard me right. Not only do you get to pay for putting luggage on the luggage service in a way we never used to before. When you check your bag, not only are we now required to pay for any food beyond water or soda or 11 peanuts in a plastic container, but. But now we're going to be asked to pay on United, with other airlines slated to probably follow. We're going to pay for the overhead bin. I really don't know what to say, but it's not a sign of an effective economy that keeps squeezing people. The airlines got together to reduce the number of flights to fill up the airplanes. The airlines got together to make the seats so narrow and small that the concept sardine can occurs to everyone who takes an economy flight these days. But they're not stopping. They've made real good profits by squeezing us into these airplanes, by making the experience ever more painful, miserable, etc. And they're not stopping so we will get to pay for the overhead bin where we stuff our bags and our coats. Second example, the European Union Central bank of Europe has decided to extend quantitative easing to pump even more money into the economy, because everything else they've done hasn't worked. The economy in Europe is in very bad shape. Americans like to notice that, imagining that if it's bad over there at this moment and not here, we will somehow escape contagion. Let me remind everyone, the crisis of 2008 started in the United States. The Europeans thought they wouldn't have to suffer. Two years later it hit there. Four years later, it bounced back and hit here. Right now, we're doing well here. They're a disaster in Europe. But the notion of an interconnected economy having one section of it, this part of the country, escape the extremes. And we have a lot of problems here, too. That's silly. And if there's terrible crimes in Europe, guess what. This is a system that keeps communicating the disease of its instability from one part to another. And here's a final example of a system spinning out of control in order to avoid even worse economic downturns since 2008 than what we suffered in 2008. As you all know, the American Federal Reserve System pushed interest rates down to next to zero. And what this did is it made a lot of companies and countries around the world borrow dollars. Here in the United States because the interest rates were so low. Well, now, because the rest of the world's capitalist economies are in such trouble, rich people are moving their assets to the United States because they think it's a safer place for rich people. Especially now with President Elect Trump, the value of the dollar is going up, which means they have to pay back the loans they took out at a low interest rate by having to buy more dollars with their cheapened currencies because the dollar is going up and other currencies are going down, that's making it impossible for them to repay the loans they took, causing a whole new set of crises to bedevil particularly Asian, African and Latin American economies. This is an economy system that doesn't work. Next, Mr. Trump announced in the last week a number of appointments, and one of those that I want to talk to you about at some length is the appointments he made of a group of Wall street tycoons. I thought you would be pleased. Who he chose for this. What? It's an advisory board. It's called the Strategic and Policy Forum. They advise the president on what he should do in terms of economic activities and policies. Leading it up will be Steve Schwarzman, the chief executive officer of the Blackstone Group, one of the biggest players on Wall street. Members of this forum that Trump has also named Jamie Dimon, head of JP Morgan and Chase. Lawrence Fink, head of BlackRock. I mean, I could go on. There are many more number of these folks were major contributors to Hillary Clinton's presidential campaign. Oh, I see. The big attack on Wall street, on Goldman Sachs, on all these big financial players, that was just campaign rhetoric. He has now put the very same people on the boards that the Clinton administration, the Obama administration also did. Big change. Well, I don't know. You know, President elect Trump says one thing, but as we know. Well, let me mention some of the other people that Mr. Trump thinks highly of. General Motors Company. You know, the car company that when collapsed in 2008 required a $50 billion bailout from the United States taxpayer. The head of that corporation that had a bailout because it collapsed, Mary Barra, she's on the board too. Clearly, this is a company whose stellar management qualifies to be an advisor. Wow. Bob Iger, head of Walt Disney. Now there's a kind of business you want the chief executive of. Ooh, Doug McMillan, the chief executive of Walmart. He's on it. Wow, this is charming. The very same people that all the other presidents go to for their guidance, that's where Mr. Trump is going. And when he was pressed on it, here's what he. Well, I want my administration to include quoth some of the greatest business people in the world. That's how he brushed off commentary that these are millionaires and billionaires. The very people who he criticized when it was asked, why did you name Bob Ross? I believe it's Bob Ross. I don't want to give you a false name, Mr. Ross. In any case, head of the Department of Commerce, he commented, quote, this is now Trump. One of the networks asked me, well, this is because this guy knows how to make money, folks. I see you're qualified to give advice because you know how to make money. In case some of you are wondering, I can round out the other people on the panel. Jack Welch, former CEO of General Electric, Goldman Sachs, lead independent director, Ginny Rometti, the CEO of IBM. I mean, it reads like a joke, only it isn't a joke, unless, of course, the joke's on us. Next item. In Austria, there was an election last week, and a very interesting one, because Austrian working people have been suffering under the economic troubles that all of Europe is suffering under. They are angry at their Establishments for the economic suffering they're undergoing, like in every other country of Europe, like in the United States too. And so this was a vote in which they had a chance, the people, to express their anger at the stodgy old financial and political establishment of Austria. What's different from what the British workers did and what the American working people did when they had their chance? They had a real choice between someone going left and someone going right. The rightist candidate, who played on anti immigration fears, who played on anti Muslim fears and so on, tried his best to get the anger of people about their economic situation to express itself in a vote for him. He was going to help them by kicking out the immigrants, by being anti terrorist in a way that made most Austrians scratch their heads, since they haven't had a major problem in this area. But what was unusual about Austria is there was another candidate who also spoke to the suffering of the mass of people economically and said the solution wasn't in being anti immigrant, anti Muslim or any of those kinds of directions. It was in recognizing that basic economic changes needed to be made. And the person who carried this banner was the leader, a former leader of the Green Party in Austria. So that was the choice, left or right, to express your anger about the establishment. And the Austrians decided by a sizable plurality of nearly 7% that they were going left. And they elected the former head of the Green Party to be the new leader of Austria. And I thought you might want to know that. Next economic update. A remarkable story, really, that I didn't know about, and so I'm assuming many of you did not. Some while ago, the city of Tokyo banned in the city area any diesel cars and trucks because diesel produces too much air pollution and is damaging to the health of the citizens. If you didn't know that, I didn't either. And I probably wouldn't have heard about it had I not come across a story this last week. The announcement that the mayors of four other European and global cities are about to follow suit. And I thought you ought to know Paris, France, Mexico City, Madrid, Spain and Athens, Greece, are all about to outlaw the harmful sulfur fuel, the diesel fuel that fuels diesel engines. And made that announcement at a biennial summit of city leaders in Mexico. Indeed, the new mayor of London, Sadiq Khan, has announced that he is likely to go in that direction now too. So for those of you that are listening, here is a decision of mayors of some of the biggest and most important cities on this planet that they're going to put the health of their citizens ahead of the profits of the oil and automobile companies that make use of diesel fuel. And if you've noticed that there's no single American city being mentioned. Good. That's what I hoped you would notice. How long will Americans permit that? Next? Every now and then I read statements by the new Pope. He's not so new anymore. Pope Francis and I caught this one and wanted to share it with you because it's an economic update, too. And it's one that speaks to the canceling out of the estate tax with which we opened today's program. Turns out on December 3, there was a conference organized by Fortune and Time magazines, American productions. They have something called the Global Forum, which is held in Vatican City. And they got an audience with the Pope, and the Pope gave them a comment on their Global Forum. I'm going to now quote from Pope Francis, whose words were entitled, we must listen to the voices of the poor. Now, here's what he said in his speech to this forum. What we are speaking about is the common good of humanity, of the right of each person to share in the resources of this world. And now hear me, please, as I quote these words continuing in the Pope's message, for each person to have the same opportunities to realize his or her potential, a potential that is ultimately based on the dignity of the children of God created in his image, image and likeness. The Pope wants everyone to have the same opportunities to realize his or her potential. If you allow some people to inherit millions or billions of dollars, they don't have the same opportunities to realize their potential as does a child or born into a family that doesn't have that kind of money. Any idiot understands that. The Pope's message here is crystal clear. To be a good Christian, as the Pope sees it, is to have equal opportunity. Cutting estate taxes not only doesn't give us equal opportunity, it guarantees and perpetuates unequal opportunity. And we can imagine what the Pope has to say about that. Next item. If you consider the four cities that I just listed that are going to be doing away with diesel engines because they're harmful to health, you will know that oil and its damage to people has been in the news continuously for months now. First of all, we all know that air pollution is produced in our society, above all by burning gasoline in cars and trucks, and that air pollution is a major cause of emphysema, lung cancer, asthma, and a whole host of other epidemics around the world. Oil, and the pursuit of oil is profitable for the thousands of companies involved in extracting and delivering it. And refining it and for the industries that make use of it, above all cars and trucks. So it's a struggle once again between profit making industry and the health and welfare of masses of people. We've even more recently seen a kind of dense historical example when the desire to make money off transporting gas and oil ripped out of the ground with fracking has led companies to violate the sacred lands of indigenous American native people, to threaten their water supply, to engage in a need to run the pipelines in an area that literally affronts the very sacred range religious family values that are propounded in our society but ignored when it comes to policy. Well, here's a new explanation, economically speaking, for why the oil companies are so desperate and can't bother respecting anything. Here's the problem. As people turn away from fossil fuels, they threaten the existence of these oil and gas companies. Why? Because many of the biggest ones, Exxon, Chevron, the big names, the value of the companies is dependent on the amount of oil and gas they have in the ground that they own. But that value is dependent on the assumption that it will ever be brought up to fuel our energy needs. And if some or all of it isn't brought up, then the value of those companies collapses today. Uh oh, now you understand why they have to work as hard as they do to muddy the world with information that isn't correct to stop any effort to end the use of fossil fuels, even just to reduce it. Because it's a direct attack on these companies whose value in the stock market, whose value in the marketplace depends on the assumption that all of that oil and gas in the ground will be brough up at a high price for them. But if it isn't because we turn to renewable sources, their economic situation is threatened in the little time I have left. A shout out. Portland Oregon just passed a new law. It taxes businesses. If the CEO, the highest paid official of the business, earns more than 100 times the median wage of the employees of the enterprise. In other words, Portland Oregon has gone on record to do something about economic inequality. It's a small step, it's a modest step. But if you're serious about doing something about inequality, you don't cut the estate tax. You do what Portland did, the city council and the mayor in passing a law that says to companies, if you worsen inequality in this society, you're going to have to pay a tax you didn't pay before. Folks, we've come to the end of the first half of economic update. I want to thank you of course for listening. I want to ask you again to make use of the websites that we list here each week to partner with us, to communicate with us. We will be back in a very short time, very brief interval, and then I think you will be excited to learn about the interview that will occupy the second half. Stay with us. We'll be right back.