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Sam. Saint Gonna change one. Welcome, friends, 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, those looming down the road, and those that Donald Trump has still not quite figured out, but will probably deliver soon. 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. I want to jump into our economic updates for today, but I want to first make a couple of announcements, if I may. The first has to do with the upcoming earth day on the 22nd of April. And I want to acknowledge the importance, probably more than ever, of dealing with the real climact, climatic, if you like, challenges that face our globe, our planet, the human race as a whole. Whether it's global warming, whether it's climate change, whether it's fossil fuel exhaustion, whatever the dimensions, they for a long time did not figure in our consciousness. For the history of capitalism over the last 300 years, we have an endless display of investments made without regard to the ecological consequences. Profits earned by companies only because they did not have to acknowledge and they did not have to pay to manage the waste they created, the ecological damage they they created. We now know that had we properly accounted for the costs of a whole host of investments done by capitalist enterprises over the last two centuries, we would never have done them or done them very, very differently. The problem with a climate damaged by an economic system is that it becomes absurd. Because to try to deal with the economic consequences and the ecological consequences without questioning the system out of which they come. Yes, other systems have done damage to the earth as well. But we live in a capitalist system. And we live in a capitalist system that has proudly proclaimed its technological revolution. It has the oil revolution revolution and the steel revolution and the atomic energy revolution. I could mention a whole lot more. But each of those revolutions of which capitalism boasts that lifted its technology, those incurred real biological ecological costs which we ignored at the peril we now face. All of this is simply an appeal that as we think about, as we celebrate Earth Day, let's not forget to question the economic system that has so much responsibility for the ecological disasters we now face. To try to solve them, to overcome them, without questioning or changing the system, is absurd given our history, and it should not be entertained by by folks that are serious about what this all means. My second announcement has to do with something else. We as an institution are always looking for friends who will help us, help us in a variety of ways. Mostly we request partners, people who can use this program by sharing it with others, people who can use information and analyses that we do on this program and share them with others. I want to underscore that we are looking for partners in all ways and that anyone listening, anyone watching this program who thinks he or she or an institution they're part of can partner with us. Please let us know. And the easiest way to do that is to make use of the two websites that we maintain partly for that purpose. The first one is democracyatwork.info that's all one word, democracyatwork.info and the second one is rdwolff with two Fs. Very simple. Use either of those websites to communicate to us that you are interested in partnering in whatever way you think might make sense from your perspective, and we will respond and see whether a good partnership can be developed. We've done that with many, I think, to our mutual benefits. We'd like to do it with you, too, but we need you to take the initiative of thinking of ways we could work together to advance the kinds of interests that this program represents. All right, let's jump in. The first update today talks about the movie industry. Hollywood. The United States became the powerful superpower economically, that it still is in large part because over the last hundred years, the United States was able to shape global culture in a very particular way. And that way is cinema, the movies. Hollywood became the center of a production of films whose quality, technically and otherwise, whose quantity even moreoverwhelmed the rest of the world, so that no matter where you went, an American film was likely playing in a theater near you. You could see it in the original English, you could see it dubbed, you could see it with subtitles, but it was there. And even if you didn't go, your children certainly did. And as they grew up, it meant both an adult and a child audience for what? For how Americans see the world. For how Americans see themselves. For how Americans understand what an economy should look like, how it should work, how we should relate to one another. These kinds of cultural shifts around the world were crucial, for example, in creating a demand for American style clothing, which was featured, of course, on the American films the world learned about. Blue jeans, dungarees, all of that. And guess where it learned about convertible automobiles that you could ride around near the surf on a California beach. Etc. Etc. The impact of all of this was to make the United States something of a magical place, a place to which people turned for all kinds of inspiration, even when they weren't aware of it. Why am I telling you this? Because the United States cinema industry is about to be eclipsed by another country's cinema industry. The country is the People's Republic of China. It has become a very wealthy country. Its large corporations have been buying into studios, distributors, movie theater chains in Hollywood for years now. Their presence is extremely important already in terms of their ownership of various parts of the movie industry. But perhaps most important is the fact that probably within the next two years, they will overtake the United States in the number of theaters in their country showing films compared to the number in the United States. Right now, China is number two and the United States is number one. But by most guesses, and the Wall street journal on the 19th of April carried a story, its prediction is by 2020, that's in three years, folks, the Chinese will be number one and the United States will be number two. Why is that important? Because Hollywood makes films to make money. And if the majority of places where you show the film are in China, that's going to shape how much money you earn in China, which is becoming the largest market for films. And that means those films have to be acceptable and interesting and okay, not just with the Chinese people, but with the Chinese government. That takes a lot of interest in the nature and quality of the films shown to their people. The world is changing, as we all know, but one of the places it's changing very dramatically is, is in the shaping of a culture by an economic system whose relentless logic is to move the center of gravity wherever the money points. Goods have been shipped to China to be produced, as we know here in the United States, in huge numbers. Now, the industry that produces cultural norms and patterns and tastes is also shifting its center of gravity. And I wanted to mention something about it. Second update has to do with a thorny topic that keeps coming up in the words of Donald Trump, but also in the words of many other commentators. So I thought to bring it home if I could on this program. It has to do with manufacturing, with those jobs in an economy you in which human beings literally use their brains and muscles to transform a piece of nature, say a tree, into a useful object, say a chair, manufacturing, industrial work back in 1980 in the United States. To get right to the point, a little over 18% of the total number of jobs in the United States were in manufacturing, making things. By now. By 2017, it is less than 8%. Let me do it again. 1980, 18% of jobs in the United States were in manufacturing in 201737 years later, it is less than 8% in historical time. That is an extraordinary collapse of the role of manufacturing in an economy. So let's first establish the simple. Manufacturing is shrinking fast as a share of the United States economy. One in 12 jobs is in manufacturing and the other 11 are not. They're in retail trade, they're in services of all kinds, they're in many other things, but not making things. Okay, next point. Why did this happen? And there are basically two reasons. First, something that always goes on in a capitalist system, namely capitalists trying to figure out how to save on labor costs, either to pay their workers less so that they have more profit, or to do the same work with less workers, because that's another way for them to have more profit. And capitalists are always looking for, for these opportunities. And there's a word in economics to describe when capitalists are able to reduce their labor costs, particularly by using new kinds of machinery or tools or equipment, and that word is automation. So one of the key reasons manufacturing jobs have declined is that capitalists have found ways to, to automate, to replace workers with machines or with new ways of organizing work. And the second way, which I've talked about on this program often has been to outsource, to export the jobs, to take advantage of the fact that over the last 300 years, as capitalism developed its industrial base in Western Europe, North America, Japan and a few other places, it consigned the rest of the world to a very secondary subordinate position, providing the raw materials, providing the food. And in most of those places, the wages, the standards of living were very low, leading those parts of the world, particularly in Asia, Africa and Latin America, to be desperate for better paying jobs of one kind or another. And so it was only a matter of time before their desperation would connect to capitalists looking to save on labor. To lead those capitalists to say, let's leave where we grew up, Western Europe, North America and Japan, and let's go to where we can get the work done by paying people much, much less. Moving from the United States to China to India to Brazil and so on, that has been going on particularly quickly over the last 30 to 40 years. Well, when you put together the export of jobs and the automation of jobs, you don't have a big problem. Understanding what happened to manufacturing, it was precisely because in manufacturing, labor unions had grown up in the last 200 years, organizations where workers collectively forced the capitalists to raise wages periodically to create livable working conditions at the workplace and so on. The very success of labor unions in manufacturing in Western Europe, North America and Japan. Their very success, in the perverse logic of capitalism, increased the incentive for capitalists to replace them, either by moving abroad where wages are low, or by automating them. The very success of workers in improving their conditions of work creates a greater and greater incentive for them to be fired and replaced by machines, or or by lower wage workers abroad. And that's what's happened, and that's why manufacturing has been so badly decimated. And given the efforts of the rest of the world that remains much poorer than the United States, Western Europe and Japan in most cases, this movement abroad is not about to change, is not about to go away, and all the rhetorical flourishes of politicians from Donald Trump on over are not in a position to change that. Let me turn finally to the automation part of the story. One of the key kinds of automation has to do with computers. An extension of that, robots. I don't want to get into the hyped narrative about how robots are taking all our jobs tomorrow. I do want to caution you, however, that when it comes to replacing workers with robots, the United States is rather behind the curve. Let me give you an example, and I'm going to use a statistic here from Reuters, the British news agency that I make use of quite often that had a story on the 18th of April. The number of multi purpose industrial robots per 10,000 employees in manufacturing. The country that is the most roboticized is the Republic of Korea. Nobody's even close to them. Number two, Singapore. Number three, Japan. Number four, Germany. Number five, Sweden. You notice what's missing? The United States. We have less robots per hundred thousand employees than many other countries, particularly countries with whom we have to compete for all kinds of productions. So there's a long way to go in the United States to install robots. So that will be another way. What's the punchline I'm getting at here? The way capitalism works, capitalists are incentivized, rewarded and enabled to move jobs out of the country and to replace workers with machines. A system that rewards them from doing that cannot be expected to do more than wave its hands when it gets the result that it is set up to produce. If you don't want to lose jobs through the export to low wages or through automation, it's the system that has to be changed because it's the system that produces the result. Simplest way to illustrate it, every technical invention that allows work to be done with fewer human labor hours than it used to take, which is what technology does every Such invention can be used in either of two ways or the ways can be shared. You can use the invention to fire the workers, save on paying them wages, and cash in on that saving as more corporate profits. Or you could shorten the workday. You could say, oh, we can get work done at six hours a day, not eight hours a day. Why? Because in six hours, with the new technology, we can get as much done as we used to require eight hours for. We don't fire anybody. We give our workforce more time off and we take advantage of the technical change that way. The latter way is what's good for the mass of working people. The former way is what's good for the capitalists who, who are a minority. We live in a system that enables the minority to use technical change for profit enhancement, not for shorter work weeks. And that's a systemic problem, not a technical one, and one we could have and should have addressed long ago. Finally, I'll have time to tell you a story from an unlikely place. It's a newspaper I look at from time to time as I prepare these programs. It's called the New Hampshire Union Leader. I don't look at it too often because its right wing editorial positions are really over the top and so not usually of great interest to me. But of course, what's on the editorial page and what actual reporters write are two very different things. And I came across a story recently on the 15th of April of this year by Mike Cote, C O T E. And it's a remarkable story about a cooperative. But it's a new kind of cooperative, or at least it's new in the sense we don't talk about it often on this program. These kinds of cooperatives are very old. In fact, it's called cca and I want to tell you about it. Sometimes it goes by the name CCA Global Partners. It's an idea developed by two businessmen in the United States some years ago who understood deeply the terrible conflict between small business and big business. If you understand how business works, the bigger you are, the better the deal you can negotiate. Whether you're buying pencils or you're buying electricity or you're selling your materials. The bigger the fish you are, the better the deal you can get. Which means that big companies have a leg up in competing with small ones because they're big. And this has always been very dangerous because what it has done is basically allowed the big companies to. To compete out of existence and eventually swallow the small ones. Which is why the typical history of an industry in Our country is one in which starts with many firms and then over time becomes fewer and fewer until literally three or four are left. We all know that the number of companies that make computers, the number of companies that make automobiles in each country, but even globally is shrinking all the time. These two gentlemen in the United States who started the CCA cooperative, CCA Global Partners, basically said to the small business universe, you need a cooperative. You need it because you won't survive otherwise. If all the little businesses got together as a co op, they would be able to buy inputs together with the big scale advantage that a large company has. They could negotiate with wholesalers and retailers who sell what they produce with much more clout because they are many gotten together in a cooperative way. It turns out cooperation has been stunningly successful with the CCA that has grown spectacularly. And because it's a cooperative, it is owned by all the little firms that make use of it. So if it makes money by charging each firm at the end of the year, the profit is returned back to all the little businesses that helped to form and create this co op. It's a cooperative. It's a proof of, of the power of the cooperative. It helps small businesses survive. But it goes one further. It demonstrates a superiority of the co op because as they enjoy pointing out, they were much less damaged by the collapse of 2008 than were all other kinds of companies, large and small, that didn't have a cooperative to help them get through the crisis. But they make a further point, which is the one I want to stress with you. When little businesses get together as a co op so they can compete with big businesses, they're still each little businesses. They have the personal involvement, the commitment of the people who work together, knowing one another, working together. This produces a better quality of service to the ultimate customer than the big impersonal corporations can, can ever achieve. So they can get the benefits of bigness by being a cooperative without losing the virtues of smallness, which in the kinds of businesses that get together is the make or break in terms of customer loyalty, the make or break in terms of being successful. It's another proof that cooperation among people, far from being a soft and cuddly nice idea, which it is, is also a very powerful political and economic strategy and therefore can succeed quite nicely, thank you, in competition with big corporations who, when they don't have that special scale advantage, have to live with the disadvantage of, of their large impersonal failures at servicing their customer, which anyone who deals with large corporations knows about. If you can take a look at CCA Global Partners for details about how small businesses and by the way, they're all over the world now. North America, New Zealand, Australia and New Zealand, as you'll learn shortly, is an important part of today's program. So they're everywhere. And it's an interesting study about how cooperation can exist not only among working people within an enterprise, which is what we talk about a lot and what the second half of today's program is going to be talking about as well, but also cooperation is a principle that has important values elsewhere in economic systems. All right, folks, we've come to the end of the first half of our program today. I want to thank you for listening. I want to remind you though, please to make use of our two websites, democracyatwork.info and rdwolf with two Fs.com make use of them to follow us on Facebook, Twitter and and Instagram. Make use of them to communicate what you like and don't about this program. Be a partner. As I spoke about a little bit earlier today, make use of what we update onto our websites, share it with other people. Become part of the team of Democracy at Work that produces this program and maintains those websites. Finally, remember, I am available to come to virtually any part of the United States to give talks. We are always looking for radio and television stations that might be interested in broadcasting this program in all of these ways. We are looking for partnerships with and from you. And please let us know if you have any thoughts about how to pursue such partnerships. Stay with us. After a very short interlude, we will be right back. Imagine there's no heaven. It's easy if you try. No hell below us. And above us is only sky.