← Economic Update with Richard D. Wolff
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Welcome, friends, to another edition of Economic Update, a weekly program devoted to the jobs, the incomes, the debts, those for ourselves, for our children, the economic dimensions of our lives. I'm your host, Richard Wolff. I've been a professor of economics all my adult life, and currently I teach at the New School University in New York City. Before jumping into this week's interesting and explosive updates, I wanted just to mention that I will be during the weekend of April, 8th, 9th, 10th, and even into the beginnings of the following week at the following places to Syracuse and Ithaca, New York, that's on the 8th and 9th of April, and in Boston, Massachusetts, on the 12th, next Tuesday. Okay, that reminds me as well to remind you that if you're interested in having me come and speak in your area, please get in touch with us through our two websites, which is the best way to communicate anything about our program, about our project that you have to talk with us about, whether it's helping us find a local radio station that might want to broadcast this program on a weekly basis, or to arrange a visit and a speaking engagement for me, or to tell us that you're interested in working with us to build this kind of democracy at work movement. Get in touch with us through rdwolff with two f's.com or democracy at work, all one word, democracyatwork.info I n f o. These are ways of partnering with us, which we invite, urge, and welcome you to do. Well, it's tax time as it is every year toward the middle of April. And so I want to start today by talking about a few tax issues because it's timely and because other people have found it timely as well, somebody, we still don't know who, has leaked the email records and payments and so on of a law firm located in Panama, that tiny little country at the canal that separates north and South America. Mossack and Fonseca is the name of the law firm, and they were hacked by somebody, or their documents were leaked by someone. We'll never know. But what we do have is in the hands of of all kinds of media organizations, starting with one of the most important newspapers in Germany, the Zutdeutsche Zeitung, but then extending to many, many, I believe it's over a hundred news organizations around the world have now been provided with literally millions of pieces of information, emails and documents of all kinds. And what are they? Well, they are private, hitherto secret records of what this law firm specializes in, and that is the forming of shell companies. What a shell company is, is basically A company designed not to produce a good or a service, not to engage in a typical economic activity, but rather to hide economic realities, to pretend that their companies, when really what they do, is a way of hiding who exactly owns this or that wealth, this or that business, and so on. This is only the latest in a long string of exposes, often through leaked documents or hacked websites that prove always the same thing, and that is that there are trillions, that's with a t. Trillions of dollars of wealth in the United States and, and around the world that are hidden. Now, the motivations for hiding wealth are numerous. Crooked enterprises, criminal enterprises, need to hide what they're doing for fear that the authorities will catch them in their illegal activity if they see the movement of large wealth. That's one reason. Here's another. You are afraid that if your government knows how much you have you, it will go after you either for criminal activities or for tax evasion, or for doing things differently from what you reported to the government, subject to each government's rules of such reporting. Then there's simple tax evasion. If you hide the money, then you make money with that money. You don't have to pay income tax the way you would if you didn't hide it, if you didn't keep it a secret. And you need help navigating the different laws in different countries. Panama is a great place to go because it has one of the least legal problems in doing all of this. By the way, the United States is almost as porous about all of this as Panama is. But for people around the world and wealthy people who want to hide what they do, Mossack and Fonseca is a famous firm, been around for decades, and. And famous for doing all of this, by the way. One of the reasons Panama has become perhaps more important in recent years is because there's been some clampdown in other countries like Switzerland, like the Cayman Islands, like the Bahamas, where it isn't quite as easy as it once was. And so people who have something to hide find the countries where there's a more convenient and friendly approach. Now, what's at stake here? Well, before I even tell you that, I want to tell you about a book that was released a year or two ago by a professor of economics at the University of California at Berkeley, and his name is Gabriel Zucman. Z U C M A N. The book is cutely entitled the Hidden wealth of nations, obviously a play on Adam Smith's original Wealth of Nations. But the hidden word is key. What Zucman does is show you, with painstaking, careful research and even more painstaking estimates how and why. It's clear that 7 to 8 trillion dollars, which is a conservative estimate, is the amount of wealth probably hidden and in most cases not paying taxes either, either not at all or not as much as they would have to. Did they not go to the expensive and dangerous process of hiding their wealth with the costly assistance of law firms like Mossack and Fonseca in Panama? Anyway, what's at stake in all of this? Well, I think the most urgent way to put it is, as around the world, in Europe, in North America, in Japan and in many other countries, the claim is made by leading politicians that there simply isn't enough money in the coffers of the government to maintain hiring people for whom there's no job. In the private sector, there's not enough money to hire people to do the socially necessary things that could and should be done. Indeed, in the second half of today's program, we'll be talking about some of those. There isn't enough money to provide urgent public services, we are told. Over the last eight or nine years, half a million schoolteachers have been laid off in the United States because there wasn't enough money to maintain public education. When a government says it doesn't have enough money, it is telling us that there aren't the wealth and income resources to be taxed by, by the taxman and the government to pay for the services we all need. Well, what the Panama Papers scandal of the last week shows us, what the research of Professor Zucman at UC Berkeley show us is that the money is there, that the wealth and the income that if it were taxed at the proper rate everybody else pays, would yield the revenue that would make all of the austerity everybody is talking about, the austerity imposed on all of us unnecessary. And why would it be unnecessary? Because the richest corporations and the richest individuals, those are the only ones that can afford the fees of Mossack and Fonseca and firms like that. They would actually have to pay what they're legally supposed to pay and what they're hiding to avoid paying. And what an interesting idea. The tax evaders, the richest, the hiders, the players of legal and semi legal games, they would have to fork up the money that would allow the society as a whole to have a decent level of employment and a decent level of the provision of public services. In tax time. There's something particularly galling about knowing how successful the rich corporate and the rich individuals have been and continue to be in evading the taxes which the politicians who enable them to do this then use as an excuse to impose austerity on us. And let's be really clear, the countries that do this, Switzerland, the Bahamas, the Cayman Islands, Panama, are we kidding? If there were a concerted commitment of the political leaders of the richest countries in Europe, North America, Japan and so on to prevent this from happening, it would take somewhere between 10 and 11 minutes to get this done. These are countries that have no military capability to resist, they have no legal leg to stand on, and they have no moral leg to stand on. Anything like a commitment of political leaders to end this outrageous tax evasion and secrecy would bring it to an end. This is not a problem of law and this is not a problem of practicality. This is a problem of political will. And the political will isn't there because those who benefit from this arrangement don't want it to be there. Staying with our theme of taxes, let me turn to bring you up to date as I was by a very interesting article in the very useful blog called Quartz Q U A R T Z. And you can find it@squartz.com if you're interested. On April 5, Matt Phillips wrote for Quartz about US corporate tax rates. And there we see another kind of corporate tax dodging. And I wanted simply to report to you, as Matt Phillips does in that article, what has been happening in the United States to corporate taxes. In order to explain this simply and clearly, I have to tell you first that there are two tax rates that corporations actually confront. One is what's called the statutory rate. That's the rate written into the law that a corporation has to pay on its income, its profits, its net revenue, what it earns, and after it deducts its expenses for producing whatever good and service it is engaged with. And that statutory rate these days is 35%. Over the last half century, since 1950, more than half a century, the statutory rate has wobbled between 35 and 50 or 55%. Okay, that's the legal rate they're supposed to pay according to the law, then economists have always measured, at least for the last 50 to 60 years, something called the effective tax rate. That's what corporations actually pay once they're allowed to make the legal deductions, the legal exemptions that have been written into the law, usually after effective lobbying by the corporations and their associations. Back in 1950, you might be interested to know the statutory rate, a little over 50% was about the same as the effective rate, little over 50% but over the last 60 years, that hasn't stayed that way. The statutory rate came down from 50% to 35%. That was very nice for big corporations. But the effective rate, what they actually have to pay after they take their legal deductions and exemptions has fallen much further. In 2010, it hit a bottom of 15%. And, and it's now between 16 and 18%. That is the effective rate is half or less of the statutory rate. So we now know from these statistics that everybody can access that the corporations have been paying less and less and less, both in the official rate they're supposed to pay and in the actual rate that they do pay. So one of the reasons, again, why politicians are telling us they can't do public employment of unemployed people or they can't maintain the services that we need as a people and that would make our lives and our economy work better, that they don't have the money is a bit of a dishonesty. They don't have the money because they chose to provide corporations with, with a falling tax rate pretty much in a straight line with some wiggles along the way over the last 65 years. That's the truth. Well, now, what can we say about this dropping of the rate on corporations? Well, it is a legal tax dodge, just like having a phony company registered by legal firms of questionable decency in little countries around the world is a tax dodge. And that's what we face this year when we look around the scene of taxation, thinking about it, because we're confronting it. Also. Next item on my tax list, also important, this last week, the United States treasury announced new rules that make it considerably more difficult for American corporations to engage in what is called an inversion. Here's how that a big American company this last week, the one in the news was the Pfizer drug Company, the Pfizer pharmaceutical company. A big company, American like that, cuts a deal to merge with a company in a country that has much lower tax rates. In this case, an Irish company, a company based in Ireland, also a pharmaceutical company, Allergan and Pfizer, was going to merge with Allergan and take advantage of the fact that the merged company would be subject to the tax laws of Ireland rather than the tax laws of the United States, saving the combined company an enormous amount of taxes and meaning that the United States government would be deprived of an enormous amount of taxes it used to get from Pfizer. And in exchange, a much smaller tax bill would be paid by Pfizer combined with Allergan to the Irish government. With the new rules announced this last week, less than 24 hours after the new rules were announced, Pfizer said it was probably going to not go through with its planned merger, something that's been going on for at least a year in the planning and so forth stages. All of it was ended proving, if anyone needed to have the proof, that tax dodging was the motivation for this unity between two pharmaceutical giant corporations. And indeed, within the next 24 hours, Pfizer announced that it was looking at other possible acquisitions. In other words, now that the tax sweetener of this deal was reduced by the laws of the United States, the new rule passed by the treasury was, well, then they would go on and do their business, grow their business, maximize their profits in some other way. And let me make a little comment. Whenever politicians get up the nerve to actually tax corporations, one of the favorite answers they get from conservative economists and their spokespersons is something like this. You shouldn't tax corporations because they'll just pass it on in price increases. Well, over the last 65 years, corporations using that kind of argument have gotten themselves much, much lower tax bills. And in case you haven't noticed, their prices didn't come down. The relationship between a price and a tax is not the one that conservatives like us to think. So we won't tax the corporations. When the taxes go up, they often cannot raise their prices. And as the last 65 years prove, when the taxes go down, we don't get the benefit of any lower prices. The companies use their lower taxes to drag in more profits. Another tax story. Well, it's a continuation of what I've been telling you. The battle is still going on between Yale University, a huge corporation with over 25 billion in its assets, its endowment and other related funds beyond what it uses for running its university. This huge rich corporation doesn't want to pay real estate taxes to the city of New Haven where it is located. 200 plus buildings. Yale University is the richest citizen of New Haven, the largest landowner, the owner of the largest number of billion of buildings, and so on. It doesn't want to pay real estate taxes on the real estate it owns that it quote, unquote uses for educational purposes. This is just tax dodging in yet another way. New Haven has the following distinction. It has one of the highest property taxes of the 169 towns that make up the state of Connecticut. And it has the highest taxes on its local citizens and its local little businesses because its richest landowner and richest citizen won't pay. That's right. Everybody else who doesn't have wealth has to pay more so that the wealthiest citizen of the community doesn't pay at all on the vast bulk of its property. If that isn't enough to qualify for the name Robin Hood in reverse, let's remember a couple of other things. One, New Haven is one of the poorest large cities in the United States. One of the top 10, to be precise. And that's measured by the U.S. census Department. It counts the number of people living under the poverty line, number of households as a percentage of the total households in this city. By that measure, New Haven is among the poorest cities in America. So let's recap. One of the richest universities on the face of this earth refuses to pay taxes to support the local government of one of the poorest cities in this country. What kind of values, what kind of morality, what kind of civilization is Yale producing and supporting when it behaves this way? And still worse, the rationale for Yale not paying property taxes is hundreds of years old. It comes from the origin of Yale as a school designed to train Protestant ministers who would serve in local communities. The idea was let them not pay taxes to enable there to be a school that might not otherwise exist to produce something we local people, then Protestants, wanted to have in our churches. Yale long ago stopped being interested in ministers or any of that. Except for a small, understaffed and underfunded divinity school, Yale's vast majority of its students and faculty have have nothing to do with Protestant churches one way or the other. So the rationale is gone. Yale is just holding on to ancient history because they don't want to pay. A $25 billion corporation doesn't want to pay the same rate on their land that is paid by a poor African American, Hispanic American or white family in the city of New Haven. There's only one proper response. Shame on Yale University. Well, I've done enough with taxes. It's a difficult subject. It's a subject most people don't like. And I've talked about things that are hardly pleasant. On the other hand, if you want pleasant pretense about what's going on in the economy, clearly this is not the program for you and and I advise you to try this evening's broadcast on radio and television. Last item I have time for in this first half of the program is another important economic event from the last week, this one overseas in the country of France, the French government, and this is very important, the French government, which is now run by a socialist president, Francois Hollande. And a socialist dominated legislature offered a new law, a new work law. It's called Loire de Travail. And in this new work law that was introduced in March, the work week rises from the current 35 hours all the way up to 48 per week for some workers. But for all workers, it lengthens the work week. Number two, it lowers the amount of pay for overtime that employers have to pay. It does a number of other things, but you get the idea. This is a law favored by employers and opposed by workers, both current workers and young people. Anticipating becoming part of the workforce in the next few years. Starting on the 24th of March, the people of France responded to the government's new law. This is a government, a socialist government that these same people voted into office not that many months ago. The demonstrations and so on in the streets of France, because that's how the people there make sure they get their voices heard, have been amazing. Starting on the 24th and then again on the 31st and then again on the 5th of April, with another one scheduled on the 9th of April. These demonstrations, at their height on the 5th of April involved, according to the organizers, 1.2 million people across France. According to the police, 400,000. Well, whichever number you like, or perhaps somewhere in between. These rank as some of the biggest demonstrations France has seen in many years. People are angry the the trade unions as well as workers who are not in unions, as well as students are participating. The cgt, the largest trade union confederation in France, is participating and has major events scheduled for the 9th of April. So we have workers and students allied in a way we haven't seen for decades. Clearly fighting a socialist government. Socialism has changed. Socialism now means very different things. And the working classes of the world, whether they're in the United States with a socialist running for president, or in France where the socialist already is the president, or elsewhere in the world are having to discover that the differences among socialists are are as important in deciding how you're going to build your society and what direction you're going in. As is the question. Socialist versus other political parties. History is being changed and written in France as much as it is in the United States. We've come to the end of the first half. These updates are designed to help you talk and interact with your friends, your relatives, your your co workers. Be a partner for democracy at work. Let us know you would like to partner with us. Use social media to do it and stay with us, please. We will be back in just a few moments for the second half of this show and the continuation of the interview from two weeks ago with Dr. Harriet Frad about the intersection of economics and our personal intimate lives. We will be right back.
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Come with me and you'll be in the world of pure imagination. Take a look and you see into your imagination. We'll begin with the spin traveling.
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Welcome back friends, to the second half of Today's Economic I want to remind you before we jump in to make use of our websites to communicate to us your questions, your comments, your criticisms to let us know if there are ways you can partner with us, helping us find radio stations that will carry the program bringing me to your area, letting us know if you're interested in becoming part of a growing movement for democracy at work. Rdwolf with two Fs com and democracyatwork.info well, I'm very happy to welcome back this week Dr. Harriet Fraad. We had an interview with Dr. Fraad two weeks ago, as many of you know, and I am very appreciative of all your comments and emails that you liked that program and that you were looking forward to the second half. That's what we got in store for you today to remind everyone. Dr. Fraad is a mental health counselor and hypnotherapist with a private practice in New York City. She also is the author of numerous articles and books devoted particularly to the question of the interactions between things going on in the largest society, such as the economy and what it implies, what it means and how it shakes and shapes personal and intimate lives of individuals. And that's what we are going to be talking about. So welcome again, Dr. Fraad, Harriet Fraad, and let me ask you if you would, just to bring everybody in our audience up to speed by a quick summary of what we did last time.
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Fine. What we talked about was how capitalism, in its relentless search for more and more profit for the predator capitalist at the top, has abandoned America and American families. The family of right wing nostalgia is something destroyed by the capitalist system in the United States because what has happened is American jobs have been computerized, mechanized, robotized and outsourced. So instead of a scarce population that had to be paid well, particularly since the best jobs were given to white men, you now have the entire globe to exploit. And wherever the ecological protections are the weakest and the wages are the lowest and the protections of workers are the lowest, you have capitalism going. So most of our goods are now from China. And what this has meant is that the fabric of personal life in the United States, which was built on the wage earning white male who was a majority in the formally until the end of the 70s and until the children are going to be born by 2050, they were in charge. They got a family wage that could support dependent women and children. We are not nostalgic for that family form that the Republicans pine for and never give the conditions for. We're not nostalgic for men with the entire financial responsibility of wives and children, nor women restricted by low wages and marriage expectations to providing domestic labor, sexual labor and child care. That's not what we're about. But what has happened is everything is precarious. People's jobs are precarious in the economy and their personal lives are utterly precarious. Now, what I'm interested in as a mental health counselor is a kind of efficiency, not capitalist efficiency. What produces the most money for the people who already have the money, but what is the most efficient way to create cooperation, connection, consideration between people?
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So if I can interrupt, you're posing because it's a very important thing for us as economists. You're posing the question that whatever efficiency might mean and has meant in the economics profession is all about business efficiency, profit making, profit maximizing. And you're asking us to consider a wholly different kind of efficiency, one that looks at the mental and physical health of relationships, of people as individuals. And you're pushing us to see that the efficiency in one area may not only not be the same as the other one, but you might be getting efficiency in the economic sphere at the cost or expense of the opposite of efficiency in terms of personal life and personal relationships.
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Exactly. That's exactly what I'm looking at.
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Expand a little bit on that.
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And so what I'm asking is, as they bandy about the term efficiency, it's important to say for whom. Efficiency in producing what? As someone who's interested in people's psychological survival, their cooperation and their connections with one another, I would look at what this capitalist system is producing for connection between people, for kindness between people, for cooperation between people. And right now our system is destroying those things. You know, we're in really bad shape.
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Give us some examples.
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For example, between one out of five and one out of eight children in the United States has a mental health disorder. And if they're poor, they're not being treated, or if they go and get some help because it's out of control, they'll get heavily medicated and never improved. So they're the most vulnerable people are hurting terribly. The second most vulnerable people are single mothers and 42% of America's kids are now born outside of a marriage connection to single mothers. Single mothers are the poorest people in the United States and children are the poorest of all 50% of Americans. Kids live at or near the poverty level, which means that they can't afford the extra school programs. They stay home alone in their houses waiting for their mother to come home from work or their parents to come home for work. And that, by the way, is the time when most crimes are committed against children and by children, the times between when their parents get home and when school is over because we don't have the subsidized quality after school programs that we obviously need. That's not efficient for making money. It's just efficient for helping children thrive and families thrive.
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And so the economic difficulties, for example, reflected in unequal distributions of wealth and income are having these effects on children, on young mothers, single mothers, excuse me. And the relationship nexus among people that is shaped so much in these early.
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Years, which is getting torn. And what I'd like to sort of present to my audience here is that that's being torn on every level of relating to one another. Starting in, let's say starting in junior high. What has happened is because of Americans pressure from moneyed interests, pornography has replaced sex education. Or is sex education. What is porn? Well, porn is between 11 and 13 billion dollar annual industry, makes much more money than all the sports franchises and all the sports teams combined. And what does porn do? How does porn shape one's concept of intimate relationships? There was an enormous study done and I'd like to read from it. This was thousands and thousands of children, some girls. This is among 1512 to 15 year old children. Some girls suffer physical injury from porn inspired sexual acts, including anal sex. The director of a domestic violence center talked about the increase in porn related injuries to girls aged 14 and up from acts including torture. In the past few years there's been a huge increase in intimate partner rape of women from 14 to 80 years old. The biggest common denominator is consumption of porn by the offender, with the offenders not able to differentiate between fantasy and reality, believing women are up for it. 24, 7 Ascribing to the myth the that no means yes and yes means anal, oblivious to injuries caused and never considering consent. We have seen a huge increase in deprivation of liberty, physical injuries, torture, drugging, filming and sharing footage without consent. Now the porn industry is very popular and it's very profitable. And what happens is in order to increase the profit margin, the old porn is then replaced by newer and more daring porn of more extreme acts of torture, of group torture. And in porn, women have no sexual needs. In hetero porn, homosexual porn is much more egalitarian. But women have no needs. They are there to service men. That's the model. I have a client who's a young woman in her 20s who thought that sex involved choking. Another one who thought that routine sex involves hair pulling because that was her experience with her boyfriend. That what had in the most intimate relationship profit has entered the scene and the government has completely opted out. It's not efficient to have sexual education the way they have in France and Germany and the Scandinavian countries. So instead you give it over to profit making porn, which is in utter disregard of its disastrous influences on the beginning of a connection, of a sexual connection between exploring children.
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And the irony is that among those against porn who have not succeeded in stopping it because the power of the business dwarfs their power, the irony is a significant number of them want to replace the sex education from porn with no sex education at all. And in a sense, this is a continuation of a denial of the importance of a major part of our mental health from being addressed in a rational way by a set of community standards that would be based on loving and nurturing the human being.
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It would be based on what they have as government subsidized programs throughout the Netherlands and the Scandinavian countries, in France and Germany, which are programs that are sex education that start in kindergarten, looking at how flowers can't grow unless they're fertilized and so on, and then go on to teach birth control. But in middle school, talk about changes that are happening in children's bodies. And then talk about what about sexual relationships, what are the needs of people, what are the bonds that could be forged? And in high school, what about the responsibility for creating another life, which could happen, and the decision to create another life so that sex education is taught as relationship education. And it isn't in the United States. The state that consumes the most porn is the most religious state, Utah, the Mormon state. And they're so alarmed, they're thinking of laws to stop porn, but not laws to educate people about their own bodies and about their relationships and connections with one another, which is efficient for creating kindness and connection in your society.
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So that there again, just to underscore it, is your point about the different calculus of a society that takes seriously the value of the efficiency of relationships, building relationships that are sustaining and nurturing of human beings, versus one that puts the priority on money making efficiency, and what that's costing us.
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Exactly. What's that costing? Look at the porn industry. It's irrelevant. The human cost is irrelevant. They're making money.
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You know, in a society that likes to give lip service to family values, this kind of point you're making is really powerful and goes directly to the hypocrisy that lies behind this.
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Exactly. Those people who are touting family values are denying families a chance to exist.
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Or to have those values as part of the household.
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Or to have the values. Exactly. Because what's happening is now that wages have been suppressed, they've been flat since the mid-70s in terms of what you can actually buy now that men and women both have to work outside the home, making less of a standard of living than a white man alone used to make. Used to make. You have the same sexism promoted by those same family values people and sentimentally touted the importance of the woman unpaid. Of course, you now have the impossibility of one of what was the foundations of American life, which is a stable marriage and child rearing place. Because women are not any longer willing to come home from work, do all the domestic labor, take care of the children, sexually satisfy their husbands and be attractive. That doesn't work when you have in.
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Addition an eight hour, when you have.
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A double shift, as Arlie Hochschild wrote about the double shift. And so what you have is particularly for the Americans that are voting for Donald Trump, the white working class that doesn't have higher education. You have, not only have they lost their jobs, they've also lost their homes and their wives because women, what is the point? To have a double shift and still not make any more money, even though, and even though single mothers are the poorest adults and children, all children are the poorest Americans, it's not worth it. And so you have a group of people who can be counted among those, if you are looking for these things, who are the random shooters of America who reclaim their manhood with a gun encouraged by the nra. And you have the collapse of marriage for all but the upper class who can afford to hire the nanny for their children, to hire the domestic labor of poorer women who can farm out their dry cleaning and their laundry and their mending and their meals. You know, it's Sheryl Sandberg who wrote Leaning in talks about how you can do it all. She had nine household servants helping her do it all. And so that what happens is marriages collapse. Particularly men are abandoned because they were used to having their sexual partner fulfill their emotional needs. Women's needs were fulfilled more often by a combination of family, children, friends, relatives. So women are doing better, their lives are exhausting but fuller, whereas men are abandoned and lost. And capitalism, in searching for the greatest efficiency of profit, abandons the mass of the American population who are increasingly poorer.
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And that's. I mean, if I can interrupt, because.
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This is just a summary, not what we could do about it.
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So I'm reminding you, we talk about that, but, you know, because this is the election season and everybody's attention, or at least many people's attention, is more or less devoted. It's not unrelated, everything you're saying, to this phenomena of such a large part of the electorate, particularly white men, but not only them, but a large part of the electorate being very angry at what's happening to them.
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You particularly.
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Yes, and very much determined not to vote in the conventional politician who looks as though he or she is part of what's been going on for 50 years. They want to break out. And no matter how outrageous the breakout candidate may sound or look or how different he or she might be, that's where large millions of Americans are going. And it's an expression of really an underlying reality that you're talking about.
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You have a huge youth vote coming out for Sanders, but when you look at youth, the unemployment rate is more like 17%. And those people who have college degrees are competing for the barista at Starbucks. You have people saddled with loans. You have a third of Americans under 35 living with their parents, which is a burden on both parents and children. And they are not doing that because they adore their parents. They're doing that because they can't afford it, afford anything else. And because profits in housing are such that if anybody looks at Manhattan, for example, most cities are cities of singles. Over half of people living in Manhattan are single. You look up at the skyline in Manhattan, you see enormous glass and steel new condos going up, starting at least on my block, at $3 million for a studio. And you have rents increasing to the point where about half of Americans spend about half of their income just on rent.
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And I might mention, for those who don't know, that it is considered that more than 30% of your income on rent is rent. Gouging it is, is making life unaffordable for people. So if 30% is the cutoff of the maximum, and you're telling us that half the people in Manhattan are spending more than 50%, you're talking about a society being squeezed in ways that are, of course, going to make people upset, unable to sustain relationships, worried about their own futures in ways that make their bodies as well as their minds agitated in fundamentally unhealthy ways.
- [49:00]
B
And there's all sorts of subsidies for building these enormous buildings that are highly profitable and helping the real estate lobbies and the real estate companies showing, because that's capitalist efficiency. Look up at the sky, all the buildings, efficiency at the expense of all those people on the ground who are being squeezed tighter and tighter and tighter until like the third world, they'll all be living in one room.
- [49:34]
A
You know, Let me pick up on your reminder. Tell us a little bit about what either has been tried around the world or ought to be to begin to deal with these issues, to be in a society that takes seriously the efficiency of relationship as something that demands attention and resources in ways that we're not doing, but we ought to do.
- [49:59]
B
Well, I'll pick the one on housing, because that's what we just talked about, although there's examples in everything and that is that in Sweden, because in Stockholm, 60% of the people living in Stockholm are singles. The government thought it was efficient in terms of relationships to create the kind of housing. So you have a lot of small apartments. You run the housing as a collective. You have a lot of small apartments with big collective spaces. So they make dinner together, they have, you know, televisions, they have their movies there, they have a big collective kitchen and dining area. You can still eat in your little apartment. But the social space, have a social space so people can connect. They don't have their money going to subsidize more and more apartments for the very rich and ignoring the mass of their population. You also have something which does exist in a tiny number of places to live in New York, it's called co housing, where people cooperatively run housing that is mixed housing. Some people with children, other people without kids, who like to see kids, sometimes people who are elderly, people who are younger, who run a housing unit cooperatively.
- [51:18]
A
Like a community?
- [51:19]
B
Like a community. And who can have the option again to eat together or separately, who all have tasks, who run the place together. So you're facilitating connection. They have old age homes that have the remarkable effect of saving money because the Medicare recipients there cooperate in running the place. They eat together, they have collective spaces, and they're so much happier that they have less medical expenses. So it turns out that it's actually less expensive. But those things are rare here or hardly exist, even though they've shown to be so successful because they're efficient in human Connection, but not in making additional profits for the real estate interests. That's a stark reminder of what this is. And if you have to go back to teenage relationships, you could have government subsidized programs that capture the imagination of adolescents doing grand things. Fixing up the subways, for example. Having arrived here on the filthy subway, you see the difference between the subways in a place like France, where there's art exhibits in the subway, where it's nice and clean, and the American subways. Teams of kids can be paid decently after school, and young people to fix up the station, to fix up public spaces, to go and read to kids, to do all sorts of things, to be subsidized, and therefore to connect with each other as human beings and doing.
- [52:57]
A
Something that they can feel good about and feel a sense of helping the community.
- [53:02]
B
Exactly.
- [53:03]
A
And being valued as someone who makes the community's life better, which is a large part of what I understand makes teenage life so difficult. The sense that there's no place for you, that no one cares that you are a nuisance or a threat. It would be revolutionary to give young people an exciting way to. To be the exact opposite. To make the community value and appreciate all the services that a mobilized teenage.
- [53:33]
B
Community could provide and all the opportunities. If you have an elegant school like the Obamas, go to Biden's children and other people who have a lot of money. It costs, last time I looked, which was last year, $43,000 for the school and then more for the high school. They have these mini masters where one choice was to go to China for about a week and learn all about China for adolescents. Another was to go to the Grand Tetons and do an ecological study. They have vacation programs. You can go and do amazing things if your parents have the money, or you can hang out at the mall and get in trouble. And if you're single, if you have the money, you can go out to bars, hang out with your friends, go out to dinner. If you're old and single and you have money, you can go to the opera with friends. You can buy cabs or cars to drive you around. If you're old and single and poor or just not having money, you stay home and rot and you hope that you could put your chair safely in the sun, the bottom of your house and don't get mugged. It's a very different reality because for the first time in the United States, the majority of women are single. And 75% of people between 18 and 35 are single. And there's nothing to do to help them connect, because that's not efficient for capitalism. It's efficient for kindness instead.
- [55:09]
A
And another way to say it, because I come at it, as you know, as an economist, is that the whole calculation is what's profitable for business. The damage that is being done to an entire generation of Americans or multiple generations in their physical health, their mental health, their family life, much of which comes back to cost billions of dollars in medical facilities, in prison facilities, in policing costs. The irrationality of it all, as well as the inhumanity stands as a fundamental critique of an economic system that works this way. Do you have a We're running out of time. So can you give us a final thought about this relationship between economics and.
- [55:53]
B
Psychology, which is our country has in our Declaration of Independence a promise to deliver life, liberty and the pursuit of happiness. That means if we were running this society for the pursuit of happiness, of the mass of people and creating the efficiency for the pursuit of happiness, we wouldn't have the collateral damage to children and families and everyone who doesn't have a lot of money on their own that we have now. And of course we have it. We spent $2 trillion in Iraq and we're losing. We spent a trillion in Afghanistan and we're losing. We have 135 countries where we have military programs under Hillary Clinton and we're not doing well. What are we doing? And I guess in summary, we could create efficiency here, efficiency for all of us in our lives for the pursuit of happiness.
- [56:53]
A
Thank you very much.
- [56:54]
B
Thank you for the opportunity.
- [56:56]
A
Thank you all for listening. We've come to the end of the program. I want to thank, as I always do, truthout.org, that remarkable independent source of news and analysis that we partner with. Like we hope to partner with all of you. And I look forward to speaking with you again next week. Your time now my baby but after a while going to be my time my time bab thing going to change change change change change change change Thing going to change y.