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Sam. Sa. Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives. Incomes, jobs, debts, all those kinds of things that present themselves to us, to our children, the ones that we see now and the ones that we have a sense are coming down the road. I'm your host, Richard Wolff. I've been a professor of economics all my adult life, and that has prepared me to present this kind of program to you each week. Let me begin quickly with a few announcements. If you are interested in supporting this program, please make use of the services of patreon.com p a t r e o-n.com if you are interested in the work that we do that's above and beyond this program, take a look at our websites, rdwolf, with two f's. Com and democracy at work, all one word, democracyatwork.info those websites are available to you without any charge 24. 7. They allow you to follow us on Facebook, Twitter, Instagram, to communicate to us what you like and don't like about the program, what you would like to see us do, and things like that. And above all, it's a resource for you. It's a way for you to partner with us in an ongoing way. We upload all kinds of materials that supplement what this program does, all of it to make it possible for you to better understand what's going on in the economy and to share that with other people. And finally, we are now represented by a speaker bureau. It's called Speak Out Now. All one word. Speak out now. They handle my speaking engagements. And if you're interested in bringing me to wherever you are, they're the folks to get in touch with. Just write to them by email. Infoakoutnow.org Good. Let's turn now to the economic updates. I want to begin by talking to you about golf courses. Why golf courses? Well, it turns out they have an enormous economic impact in our society of a sort that everyone ought to understand. Let's begin with Los Angeles. Because of the recent work of Malcolm Gladwell and others, it has come to be understood what an enormous economic burden golf courses are. Let me explain. A relatively small percentage of the population plays on golf courses. And golf courses, as you know, take up an enormous amount of land and in places where water is scarce, an enormous amount of water. Well, it turns out that wealthy people in particular like golf courses and have made sure, through their wealth and power that comes from it, to allow the golf courses to do all kinds of things, use up an enormous amount of land, use up an enormous amount of water, get themselves exempted from environmental rules that shape the quality of the air we breathe, and so on. The result is, for example, in a place like Los Angeles or many other parts of the United States, that by using land in an area for a golf course, you make an enormous amount of land unavailable for other uses. For example, housing. If you want to know why the rents are high in many parts of the United States, part of the reason is you can't build rental properties on vast areas of communities that have been set aside for golf courses. The reason I bring it up is two things. First, it's a wonderful lesson in why markets are. Are not what they claim to be. There is no free market in land or in rental units because if it were free, then there wouldn't be the government stepping in to give all the benefits to landholders. To take huge parts of a community's land out of availability for housing, to get special tax treatment, which is often given to get special exemptions. All of the things that make a golf course function that way would be more difficult if they weren't supported by the government. So the price of your home, the rental you pay, is in part shaped by the ability of wealthy people to get the government to give them those golf courses where they want them, convenient. Otherwise, they'd have to go to some land that wasn't relevant to a community further out, for example, and have their golf courses at a remove. That would be a burden on those who use the golf courses, but not the burden on everybody else that they now are. I was reminded when I researched this little story about some work I did a few years ago when I lived in New Haven, Connecticut. I served there on what was called the New Haven Revenue Commission, an official body looking into the relationship between Yale University and the city, a relationship that is, to be polite, a rip off of the city by the university. Nothing illustrated this better than the hearings we had on the Yale golf course. Turns out the Yale golf course is right inside the city of New Haven, taking up an enormous amount of land in that city which could otherwise be generating income for the city if it were used for industry or commerce or residences. If there were rental properties there, the rent would go down because there'd be an extra supply of housing relative to an unchanged demand for it on the part of people. You get the picture. Yale enjoyed having that course. And when we, the commissioners, asked Yale the question, well, what do you get from this? We don't see the educational purpose because it turned out they didn't teach courses in playing golf, and they didn't teach courses in how to maintain a golf course. That's not what Yale thinks of itself as doing. And they admitted on the stand, when we asked them questions, that the point and purpose of the golf course was to have rich people come up to New Haven, usually from New York, and play golf while they visited. It was a fundraiser, but it took many acres of land from the city of New Haven, a city of 120,000 people whose rents, whose taxes were all less. And this was the best part. Yale refused to pay taxes, which it is exempted from, as universities are. So not only was the land withdrawn, not only was the ability to have commerce and residences restricted for the people of New Haven, but they wouldn't even pay taxes on it. Which commercial and industrial and residential properties would have had to. The city lost 12 different ways. For what? To convenience the richest people in this country, taking a trip from New York or Boston to New Haven and playing a few rounds of golf. The undemocratic nature of this, like the critique of the notion of a free market in things like land and rental properties, is, Is too obvious to ignore. There's a lesson in all of this, that we don't have a democratic system for choosing how to use the property we have. And that's something we ought to think about. I want to turn next to Bernie Sanders and drugs. No, not that he uses them, as far as I know, but he is interested, as are other senators. He's not the only one, in the prices of drugs that we pay. They are the highest prices in the world, just like we as a nation pay more for our medical care than any other people on this planet as a share of our national wealth. Well, it turns out that earlier this year, Bernie Sanders, together with Senator Amy Klobuchar of Minnesota, introduced a bill, a budget amendment in that case, which had a basic purpose and they've been working on it ever since. The purpose is to allow American citizens to buy drugs from Canada. Let me explain. Canada has a National Health Service single payer program. Canada operates, as we all know, in different ways from that of the United States. And one result of how they manage their health care is that the prices of drugs identical to those here in the United States cost much, much less. So Americans, not surprisingly, have decided they would like to be able to buy the drugs from Canada and pay a lower price than what they are charged here. This has gotten the drug companies into a tither. They want us to continue to pay much higher prices for our medicines than other people like Canadians do. And so they have blocked in every way they know how the passage of bills or amendments such as those championed by Bernie Sanders that would allow Americans. It has gotten other American politicians enraged too, not just those of us who are critics. I like particularly the comments made by Minnesota Governor Tim Pawlenty, who was a candidate for president. He said, what's this stuff about Canadian medicine being unsafe? First of all, it's a slur on the Canadians. What are you saying? That the people and the government of Canada don't take care of their people to prevent them being exposed to dangerous drugs. What a statement to make about our neighbor. And then he got more colorful and he asked, my first response to that is, show me the dead Canadians. I'm quoting here. Where are the dead Canadians? His point was, if it's unsafe, these drugs in Canada, where is the evidence that people there have gotten sick or died from dangerous drugs? There is no evidence because of course, it has nothing to do with that. This is a way of maintaining profits for our drug companies, which are among the highest of drug companies in the world and of any other company in the United States. Drug company profits are stunning. And as if you needed me to add to this, it is also the case, and this is a quote from the International Business Times a couple of weeks ago. Campaign spending by the pharmaceutical industry is, I'm quoting from the newspaper here, quote, skyrocketing donations from pharmaceutical political action committees are up 11% as compared with 2015. And donations to ranking members of health related committees in the Congress have risen by 80% from two years ago. Amazing. The buying of politicians and the lesson here, the message for us here has to do with what it means to allow wealthy companies to become, in effect, monopoly sellers of what they produce by excluding everybody else, in this case excluding the Canadians from selling to Americans the identical safe medicine from what they would buy here. By the way, the law in this country which currently prevents us from buying drugs from other countries does not prevent drug companies in the United States from buying drugs outside and from buying components of drugs outside. That's why years ago, the Food and Drug Administration has in place procedures today to check for the safety of all medicines because of their foreign components. So we have in place what will enable us to allow Americans to buy cheaper Canadian drugs. It's just profit for a few at the expense of the budgets of the many. There's a message in here I don't want anyone to miss. The next item is short and sweet. I Hope. The Congress of the United States, goaded by the Trump administration, is about to consider dealing with the corporate tax rate. And a great deal of nonsense is being spoken about the need to cut the taxes on corporations. Here's how the argument the current tax rate on Corporate profits of 35% is higher than that in most other countries of the world. That's true. That's correct. It's just not relevant. Why? Because the proper comparison of the tax rate on corporations in this country and elsewhere is not to use what's called the statutory rate, the official rate, because that's not what corporations actually pay. They are allowed all kinds of deductions, all kinds of adjustments. And when you take into account the deductions and adjustments, both for American companies working here and for foreign companies in their home countries, the United States effective tax rate for corporations, not the statutory formal one, but the effective one, what they actually pay, is in the neighborhood of 14%, not 35%. And then the United States, when you compare the effective tax rates, is nowhere near the top in the world. It's all bogus propaganda to try to get another tax cut. By the way, over recent years, tax cuts on corporations have allowed corporate profits after taxes to rise spectacularly. They don't need it. They've already benefited from it. This is a lesson in profit grabbing, in using the power of your business to control the politics to give you yet another benefit on top of all of those you've purchased before. And as if to drive this home, let me turn to the same lesson from another source. The New York Times recently reported on the product, a famous product of the Monsanto chemical company, the weed killer called Roundup. Very famous, widely used, it is a source of enormous controversy because Roundup is thought to be a very dangerous pesticide with serious health consequences. It turns out, according to the New York Times, that Monsanto not only produces this, but tries to muddy the water in terms of what people understand about the health benefits. And it got caught funding the academic research professors it found, who in exchange for all kinds of financial assistance, let's call it published research in reputable journals questioning the medical health impacts of that drug. And as usual, that has delayed or undone controls on the use of Roundup, which is dangerous for our health. Once again, I'm not a scientist. I'm not weighing in on what's right and what's wrong. But here's what I know is wrong. To allow a private company that profits off making something to be in the business of sponsoring scientific research is asking for Corruption, It's a crazy way to organize a society. Professors are not supposed to do that. And if they do accept money, they're supposed to make that very clear so people can take that into account in evaluating what they've done. And what the New York Times exposed was Monsanto taking advantage of the fuzziness here. And that's at risk of our health. The last update I have time for is deserves a little bit more attention. So I've left the time to do that. I call this the economics of scapegoating Immigrants. Here's the way this works and I'm going to use examples from the United States and from Germany, two countries that are guilty of scapegoating immigrants. Why does that happen? Well, usually it happens because politicians get into difficulty because the economy isn't going well and they get blamed for that, rightly or wrongly, or they think their careers can get a boost. So what politicians do, with or without the support of the business community, sometimes they get the support, sometimes they don't. But however that plays out for the politician, an advantage is found in blaming immigrants for whatever is wrong in this society and then positioning yourself as the great champion to stop the immigrants whom you've demonized from doing the bad things they're doing to the economy. So let me give you the relevant examples. Two of the richest countries on this planet, the United States and Germany, have leaders these days who are advantaging their own political fortunes by scapegoating immigrants. I don't have to document what President Trump is doing. He's been a very good promoter of what he's doing. He has said things about Mexicans and Muslim immigrants that I won't repeat. You all know it anyway. And he has declared that somehow solving our economic problems is going to become easy because it's all about immigrants and we're just not going to tolerate the immigrants, et cetera, et cetera. You may not know so much because it hasn't gotten the same attention, but that Angela Merkel in Germany plays pretty much the same game. When first the crises in the Middle east and elsewhere began bringing large numbers of immigrants from the Middle east, particular places, particularly places like Syria and Iraq and Afghanistan, Asian and Middle Eastern countries when they began coming in large numbers, Ms. Merkel, who presides over the most prosperous European economy these days, Germany saw another chance to bring low paid, low wage workers into the frame of of German industry. And she welcomed the immigrants with all kinds of good sounding phrases about solidarity, charity, compassion and all those kinds of words. Then the people Inside Germany got upset, understanding that if you bring large numbers of low paid, impoverished immigrants desperate for work, your business community is going to take advantage of that by lowering wages, hiring immigrants instead of native born workers. This is a very old story and the German working class was smart enough to figure it out. And they let Ms. Merkel know they were not pleased with what was going on here. So Merkel, seeing that there might be a political cost to immigration, turned around and positioned herself, like Trump, as the great stopper of immigration. 180 degrees switcheroo. In 2015, the number of immigrants allowed into Germany, 900,000. In 2016, the last complete year, that was reduced to 280,000. An unbelievable shutting down of the German border. Let's take a look, particularly at the German example. Immigration into Germany is a result especially of two the relative wealth of Germany relative to the poverty in the places from which the immigrants come. And number two, the war going on all over the Middle east, but particularly in places like Syria, Iraq and Afghanistan. But the Germans are not some innocent victim of immigrants. The Germans are participating in those wars. The Germans building their economies around those wars, commissioning and contributing troops and equipment and ships to those wars. Either as a Germany alone or as a member of NATO. The Germans are part of the problem of bombs falling in areas where people make the unusually obvious decision, time to take my family and get out of here, because it's too dangerous to live even without the war. The gap between the wealth of Germany on the one hand and the poverty on the other, of people in the Middle East a few hours by train from Germany has always meant and always will mean that people who want a better economic life for their families and themselves and what they can get where they are, will move to where the chances are better. But again, Germany is not innocent. Germany has done many, many things over a century and a half to concentrate wealth and growth inside its border and to take the raw materials and the food from the rest of the world to make all that possible. Germany had a big empire in Asia and Africa. And even after they lost the empire, they continued to have economic relationships that were very good for Germany, not so for the countries from which they took a large part of their wealth. So they're not innocent. The uneven development of capitalism that makes Western Europe rich and Asia and Africa poor is a product as much of German decisions and German business as it is of anything else. They are reaping what they sowed. Immigration is a response to an uneven capitalism punctuated by war. And the United States is Not so different. Once again, the United States is the major shaper of the economics and politics of the Western Hemisphere. If the United States is very rich and all the countries from which immigrants come in Latin America are poor, the notion that the United States has nothing to do about that, no responsibility there, that's only believed by people who don't want to face what the reality is. If you make the people on your borders very poor, if you leave them very little of the production of wealth you achieve, you really can't be surprised if they start moving from the poverty they've known to the chance for a better life. The history of the United States is that process repeated over and over again from every corner of of the globe. And now here's the punchline of this story. When we say, as many of us do, that immigration makes a country rich and powerful. The United States is the obvious example. Letting immigrants come here for the last hundred and fifty years and longer, from all parts of the world, has been an important contributor to the wealth and power achieved in the United States. Why in the world would you want that to stop? But even if you do, the arguments for it make no sense. Is it possible to welcome immigrants in such a way that they don't cause the wages of native workers to go down, that they don't represent a threat to the job security of people already here? The answer is so obvious that I'm tempted to simply say of course. But I know that in the environment we live in, I have to explain here is one solution. Put a tax on the richest people in America, those who have become much richer in the last 30 years, those who can afford it most easily because it won't change their lifestyle one iota and take that money and provide genuine full employment. And in the United States, for those born here and for those coming, make the arrival of immigrants a moment when you really provide jobs to everybody, then the native workers will not feel threatened. They will welcome the immigrants as the source of creativity and diversity that they've always been. Because you will have taken away the competition among workers, native and immigrant. That has always been the root of the problem. If you care, that's a solution. By the way, as a hint to Americans beginning to care, let me give a shout out to Mayor de Blasio of New York City. He's just proposed a tax on the wealthy, very small, to rebuild the subway system that millions of New Yorkers rely on. That's right. Go to where the money is, where taking it will make the least impact on the few who are affected in order to improve the lives of the many. That's the lesson here. Stop beating up on the immigrants. It's the wrong target, it's not the problem you face. And a better solution is available if you just face where the wealth has to come from to do it, which it should have been taken long ago. Important lesson these days when demonizing and scapegoating immigrants is another shameful page of we don't really need to turn We've come to the end of the first half of Economic Update. Thank you for being with us. Stay with us. We'll be right back. Come gather round people wherever you roam.