← Economic Update with Richard D. Wolff
Loading summary
Transcript1 lines
- [00:00]
A
Sam. Saint gonna change. Welcome friends to welcome to another edition of Economic Update, a weekly program devoted to the jobs, incomes, debts, hours, our children's that confront us every day. The economics of our lives. 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 updates for this April time, 2016, I wanted to remind you, as well as invite you to make use of the two websites that we maintain as part of this project. The first is rdwolff with two f's.com and the second is democracyatwork.info these websites offer you a lot of opportunities and a lot of material and I want to just briefly invite you to make use of it. Every one of these radio programs is archived on those websites so that if you miss us on any of the 52 odd stations that we broadcast from every week, you can always go to our website and listen when it's convenient to do so, which is also true of the podcast format for the program. Likewise, visiting these websites allows you to share what we do with other people, whether you use Facebook, Twitter, Instagram, YouTube, and we are very active on all of those platforms and we invite you to check us out, become a follower on Facebook and Twitter and so on. Also to share with other people the very fact of these websites and the material that we gather there that supplements everything we do on this website. Finally, use the website's email capacities to let us know what you think. What do you like? What do you not like? What would you like us to talk about? What would you like us to focus on? What would you like us to change? Would you like us to work with you to get us on the local radio station where you live? Would you like to arrange a speaking engagement for me or one of the others in this program to come and speak to your group? These are things you can communicate to us so that we can be a partnership and a communicating, interactive partnership at that. Okay, let's jump in. Well, the first thing that caught my eye in the last week is one of those contrasts that is so stark and says so much in so little that I thought I'd share it with you. It comes from USA Today. Yes, that newspaper which published on April 18th of this month a story written by Matt Krantz. And it does a simple job. On the one hand, it looks at the industries, mostly restaurants and retail outlets, that are the object of the effort of underpaid workers to get $15 an hour. And it looks at those and says what are the chief executives getting in those companies that don't want to pay $15 an hour, that are working hard on publicity campaigns and anti union campaigns to prevent that from happening? What do they get an hour? And let's just compare. So that's what he did. Let's start with the best paid of the executives fighting against it. Larry Merlo of the CVS Health Company, the pharmacy, the local drugstore. They took his salary as reported for the last year, fiscal 2015 and they divided it by the number of hours this gentleman worked to work out his hourly pay at CVS. Ready? Here we go. $13,914 per hour. That's right. An executive who earns $13,914 an hour doesn't want to pay the clerks in his or her stores $15 an hour. Let me give you another one. Leslie Wexner of Victoria's secret parent company known as L Brands. That executive got $13,062 an hour. Howard Schultz of Starbucks Corporation made $9,659 an hour. And Douglas McMillan of the Walmart Corporation took in $9,323 per hour. These are the types of companies usually lined up in opposition to paying the clerks, the short order cooks, the waitresses $15 an hour, 9,000 plus on one per hour, $15 on the other. There is no comment I could invent that has anything to add to what the naked numbers say. Also last week a report, this time from the Mitsubishi company in Japan, one of the major automobile producers in the world produced a million cars last year and that certainly makes it a major automobile producer. Guess what Mitsubishi announced. It announced that it had ready this from cnbc report dated April 20. Mitsubishi Motors said it falsified fuel economy test data to make emissions levels look more favorable. Ah yes. What Volkswagen did and got caught at, what other companies, both American and non American have admitted to been caught at, is now got another added to the Mitsubishi. Indeed, last week was full of stories about how VW in Germany is planning to give all the customers stuck with with the cars that it phonied the emissions tests for putting in software that would mislead the emissions test. They're going to give each owner of such a car $5,000 and hope the problem goes away. And they're going to have to offer to fix the car and hope that problem goes away. It's worth the billions because the advertising black eye they have been getting has hurt them as every statistic shows. I want to comment, however, on what all of this means and not on the grubby details that their lawyers, together with the government lawyers, are hammering out. We have seen the automobile industry, almost every major company, admit to systematically knowingly cheating the public about the damage being done to that same public's air. The whole point and purpose of emissions testing was to make cars less likely to give us coughs, emphysema, lung cancer and all the other absurd consequences of having a public transportation system based on the private automobile and therefore polluting the air in a way that no mass transit alternative would ever do. The whole point was to limit it. And the whole profit driven strategy of the major companies was to avoid, evade and as we now know, cheat systematically the government's efforts to, to limit the amount of damage the private car is doing to us. These companies have failed the test of being allowed to exist. There really is no other conclusion. They have betrayed the public trust. They have substituted their own private profits for what's good for society. They have lied, they have cheated, they've gotten caught, they've, they've now admitted it. What more do we need? So what's the alternative to leaving the car companies owned and operated by the same private profit driven companies? Because that's what's actually happening. After the fines are over, after the news stories are done, the same people who did all of this will be in the same position, driven by the same pressures to be profitable that led to this disaster. The alternative is no more private profit driven car companies. It's really like our banking system, which like our car system has been caught exposed as lying and cheating and finagling, has admitted to it, has paid billions in fines. Really the same story. And yet we allow the private big bank system that brought us these disasters to continue owned and operated by profit driven private corporations. And we're about to do the same with the automobile industry. The alternative is simple. These industries ought to be run together by three different councils to provide the checks and balances which a private, public, profit driven capitalist system cannot do. The first council would be the workers. All of them democratically running the operations of their business with all those people involved. Keeping a secret of something you're doing that hurts the public will be much harder to do alongside them. Sharing power would be elected, democratically elected councils of consumers, the truck drivers, the car owners, the bus people, everyone who uses a vehicle has to be in on the discussions about how to run it, how to engineer it, all the rest of it, and finally the government as the kind of general representative of the public, not just the public that owns or buys a car, that's the consuming public, but everybody else. So we have the general public, the consuming public and the workers together comprising the knowing, ruling, governing of these enterprises. That's the only way to avoid endlessly returning to the same evidence that private profit driven capitalism is not good for anything other than the profits that it is focused on maximizing. Next item. This one is a direct response to a number of your questions. You are interested in whether the people who get public assistance in the United States are either working people or not working people or what it all works out to be. And I found a useful piece of information from the Economic Policy Institute. You can find them@epi.org based in Washington. Back in February of this year, David Cooper, writing for them, did a nice statistical study whose results I want to summarize for you now. Okay, what proportion of working people, that's people who have a regular full time job, with what proportion of them get public assistance? Answer. Right. This is the answer for the year 2000. I believe it's 14. The last year for which they had numbers, 29.3%. That's roughly 3 in 10 working Americans need public assistance to make ends meet according to David Cooper's analysis. But he did another statistic I found even more interesting. If you look at low wage workers, and by that he meant workers who earn $12.16 an hour or less, $12 per hour or less. It turns out that a majority, 53.1% of low wage workers get some form of public assistance. Food stamps, help with their rent earned income tax credits and so on. Well, let's see, what does that mean here? The economics is really important. If the government pays people, helps them with money, with cash, with goods, in kind, with services in kind, it is doing what the private employer would otherwise have to do. Let me drive this point home. The government is picking up the tab for people because the employer is paying them less than they need to get by. And we're not talking about generous levels of quote unquote getting by. This is a wonderful benefit to an employer. It allows the employer to to have the services of working people without having to pay for them. This is not really a subsidy simply to the worker who gets the benefit. It is a spectacular summary, rarely counted as such to the employer of that person. Because one thing you can know for sure, that if, if the government didn't help low income workers, it would be a big pressure on them to press their employer for higher Wages. The big beneficiary of subsidies to low income workers are the employers who are getting away with not paying them. But now let's take it the next step. The workers accept this because, yes, their wages are low, but they're getting help from the government. But this then becomes a burden on whom the government is having to pick up the tab. And where does the government get the money? From taxes. And where do the bulk of taxes come in the United States? From average working people. In other words, we live in a capitalist system, so called, that socializes a large part of the wage cost in this country. That is, we make the taxpayers in general pick up a significant burden for giving employers the possibility of paying workers much less than they otherwise would have to. Wow. Wow. Let me say it again. Wow. The alternative is clear. Wages ought to be set at a reasonable level and private employers and public employers should be required to pay that level. That's the impetus behind the minimum wage struggles in this country. Make the employer pay what he should have been paying all along and stop this absurd, costly arrangement of setting up a government system that taxes average people to help out those at the low end of the wage scale so that the employer doesn't have to pay them a decent wage. What a strange system that we live in. Here's another response to questions you've sent in to me. You asked about the funding for the presidential race, so I went and I got the answer. The Bloomberg Service publishes each month something it calls the presidential money race. And as of the end of March 2016, covering the current presidential race across both 2015 and, and these first three months of 2016, I thought you might be interested in who has raised the most money. Far away, the biggest fundraiser is Hillary Clinton. Nobody's close. She has raised both by her campaign and by the super PACs that are raising money directly for her. The sum of 268 million. 268 million. Coming in. Number two, Bernie Sanders. But he's not at 268 million or 250 or 240 or 2 anything. He has 183 million, many, many tens of millions of dollars less than Hillary Clinton coming in. Number three, you might be surprised. Jeb Bush, he's not even in the race anymore. He raised almost as much as Bernie Sanders at 156, but that wasn't enough for him. Coming in Next, Ted Cruz. 136 million. Okay. Wow. And finally, Marco Rubio at 117. All the others have much, much less. You might be interested to know that Donald Trump reports raising $49.3 million. Right. That's 1 5th, 1 5th. 20% of the money raised by Hillary Clinton has been raised by Mr. Trump in this presidential race. Well, you know, what can I say? It's hard to comment when the information is as stark as all of this is. Let me turn next to a report from Oxfam. Yes, that's the same charity in England, Oxfam, that produces the reports that I quote in this program about inequality around the world today. But because of the flow of questions and comments many of you have directed to us about the Panama Papers, the revelation a few weeks ago of how a law firm located in Panama regularly and for decades has been creating shell companies, companies whose purpose is not to buy or sell or produce anything, whose purpose is to have the profits show up for any company anywhere in the world as if they were profits made in Panama because the tax rate there is so low. To hide assets wealth through a series of companies whose real owners are virtually impossible to figure out because of the rules and laws in Panama that make setting up such impenetrable companies easy to do. So Oxfam followed up, partly also activated by the revealing nature of the documents, millions of them released from the files of that law firm. They did some research. And the research they did had to do with American corporations who have hidden their money, hidden their money in tax havens. They're called places like Panama. But not only Panama. There are loads of them where you can take advantage of local laws to evade or avoid or reduce your taxes and to hide whatever it is you're doing. So here are the results of Oxfam's report. And if any of you are interested, it was reported in a variety of places. You can follow it out by just checking on Oxfam. It is a remarkable set of stories, if you're particularly interested. The report you would want to check for at Oxfam is called Broken at the Top. Broken at the top. Okay, Here we go. Us corporate giants. And here they list the top 50, basically of them. But the big ones whose names might strike you are Apple Corporation, Walmart and General Electric, the real giants. Turns out that they have stashed. That's the word Oxfam and reporters have been using. They have stashed or $1.4 trillion in tax havens. Wow, this is really getting interesting. What exactly does that mean? Well, let's give you an example. Apple, the world's second largest company, is at the top of Oxfam's list. It had $181 billion held offshore in three of its subsidiaries. My goodness. General Electric, which has received 28 billion in taxpayer help in recent years, came in second with $119 billion stored in. Listen to this. 118 tax haven subsidiaries and number three, Microsoft, with a mere 108 billion in the top 10 of companies with money hidden. And a top 10 that also includes Pfizer, the drug company, Google's parent company Alphabet, and ExxonMobil, the largest oil company in the world. I mean, I could go on and on. These are companies, many of whom have received taxpayer funded assistance and bailouts in and since the crash of 2008. And they repay the kindness of the American people filtered through the American government by stashing money abroad, by hiding it, by not paying taxes to the United States government. Something I'm going to explain in a minute. England, which got burnt because Prime Minister David Cameron, his family had stashed money in the Panama scandal and he's been tarnished. He's going to do something about it. But apparently that does not include reining in places like Bermuda, Bahamas, British Virgin Islands, which are famous for having these kinds of law firms doing all of this. Okay, so why would a company, a corporation, keep its money abroad either openly or hidden in one of these tax havens? Well, the answer is, as some of you have written me, asking me to explain in some detail, really very simple. Here's how it works. Under the tax laws of the United States, there is a rate of 35% that corporations are required to pay on their net revenue or profits. The difference between the money they earn and the expenses they have to produce whatever they sell to earn that money on that profit or net revenue, they are required to pay 35%. And that's what big business lobbyists and PR firms point to, isn't that high. They like to say, well, they're not telling the truth. There's really no nice way to say this. Why? Because corporations are legally allowed, that is, they have lobbied to get the laws that make it legal for them to deduct certain kinds of income from having to pay a tax and to reduce their taxable income by taking certain exemptions, certain kinds of allowable adjustments to the tax calculation. So that in economics we have for years, as all big corporations perfectly well know, we have for years had something called the effective tax rate, what the corporation actually pays after it takes advantage of its legal exemptions and deductions. That's not 35%, that's about 26%. But now we have the possibility that a company that earns money abroad, which most big corporations do, has the right to leave it abroad. And if it leaves it abroad, it doesn't pay any tax in the United States at all. It may have to pay a tax over there where it earned the money and left it. And if you figure that in, it turns out that that means the company pays about 15/2 percent. Wow. Now you know why corporations set up tax havens, bribe local officials where needed, manipulate, because it saves them tax money. Tax money they don't have to pay, tax money that the United States government doesn't get, which is why your taxes are higher than they would otherwise be. We've come to the end of the first half of today's program. Please stay with me where we're going to discuss in the second half a couple of major issues, a tax issue and the whole issue of the economics of gentrification. We will be right back. Stay with us. We're looking forward to the second half of today's program. Welcome back to the second half of today's ECONOMIC update. I'm your host Richard Wolff. And in the second half of today's program, we're going to look at some topics in a bit more depth. But before we do, I want to finish off with, from the first half of today's program, a few more comments on our tax structure here in the United States. After all, it is tax season for many of you. I suppose you recently finished your tax forms and filings for 2015, if you hadn't gotten to it earlier. So the tax issues are in your mind. So let's take a look at the tax structure of the United States. First, the federal money coming in, money going out, and then the overall tax structure, just to make some economics points that you might not have considered. And let me begin by pointing out as a cautionary suggestion to everybody, how you understand the tax system depends on what your agenda is. There are alternative ways of analyzing budgets. There always have been. And there's nothing innocent about doing it. People who approach it have a choice of ways of doing so. If they're honest, they tell you that. That's why I'm trying to tell it to you now. But if they're not, they present one perspective, one way of thinking about it as if it were the only way or the right way. And that just won't do. It's a little bit like acting as if one particular religion is the correct and right one and everybody else is wrong versus understanding religions as different ways of Trying to deal with certain issues in human beings lives. Okay, the budget. First problem. What do you count as a tax? After all, the federal government's budget begins by looking at where does the money come from. And there's a frequent shorthand that runs like oh, everything that comes to the government is a tax. Well, not really, because the word tax is not so clear. For example, if you take a certain portion of your income and call it a tax and send it to the government and they use it for everything that comes up as an expense, from fixing the roads to, to helping college students with loans, to financing the Social Security system and so on. Okay, that might make sense, but that shouldn't get the same name as for example, a deduction from your wage every week that is set aside by the government to be given back to you when you're age 65. Because then what the government is doing is actually running the a pension program, Social Security, Medicare and so on. These are insurance systems. They take money out of you like paying a premium and then they give you something back you as an individual, in fact, what you get back has some relationship, certainly in Social Security with what you put in, etc. Whereas a general tax payment doesn't have that. You can use the word tax for both of them, but it hides more than it reveals, which is not a good sign. So let me be blunt with you. For me, I separate what we pay to the government that it uses in general from what we pay to the government because it running a insurance program for us like Social Security. Once you do that, once you see that money in say to be eligible for Medicare when you're 65 or money in to be eligible for a Social Security pension payment every month, etc. These kinds of things really ought to be considered separately. And if you do that, then it becomes crystal clear what the overwhelming cost of the taxes we pay, the money that isn't geared to taking care of us in our old age or in the case that we have medical needs, particularly after we're 65. When you look at that, the real kind of tax as tax part, then the overwhelming use of our money is for defense, for the military. And there it simply reminds me us all that the United States spends more on military than the next seven countries after us. And those countries include China, Russia and so on. So we spend more money than the next seven combined spend. Nobody is even close. And our taxes pay for that. It's of course a perfectly legitimate question whether the taxes we pay are excessive for the defense we get it's also legitimate to ask whether we need a defense now that we have really nothing like the enemy, the Soviet Union, that we used to use to justify these expenses. But it is a taboo topic in the United States, which is a very good thing for the companies that produce the goods and services that the United States military spends all our tax money on. And the periodic scandals about that should surprise nobody. Turn next to the way the money is raised, putting aside for the moment how it's spent, the money is raised. Well, we have basically three or four categories of money coming in to the federal government. One, and the one talked about the most is the income tax. Less than half of the federal government's money comes from the income tax. Let me make sure everybody gets that. Less than half of the government in Washington's money comes from the income tax. And the income tax is a progressive tax. What that means is the higher your income, the higher the percentage of it that you are required to pay. And the basic principle behind the income tax is, as it always has been, that those who are richer are more able to pay. And that fairness requires that we take more from those more able to pay, as we might in a family or a community that needed to raise money from its members. But only half is raised in this progressive way. The progressive income tax. The second biggest source of money is this odd thing called payroll tax. And here again I want to quarrel with the name. It's money taken out of our paycheck. That's why it's called a payroll tax. But it's money to be set aside to cover our old age. Payments out of Social Security, certain payments out of Social Security for survivors of spouses who die early, things like that, people with certain kinds of injuries and incapacitations and, and the Medicare, Medicaid, kind of helping people who have emergency medical needs that they can't pay for. And we put that it's a kind of social insurance. In other countries it's called social insurance in order to distinguish it from a tax payment which doesn't have this put the money in, get the money out for yourself kind of arrangement. It's a, the word tax is used for those more general payments. In any case, the payroll tax comes at, in at one third. So if you put it together roughly the, the income tax and the payroll tax, that's three quarters of the money Washington gets. Now, the payroll tax is not progressive. It's actually the opposite. The higher your income, the less percentage of it you pay. The, on the payroll tax, that's Right. The payroll tax's non progressivity reverses or cancels out the vast bulk of the income tax's progressivity. So if you put the two together and they together are three quarters of what the federal government gets, you don't have any progressivity in the United States. But the worst is yet to come. Corporations, we haven't talked about that yet because the income tax that I was referring to should have been called the personal or individual income tax. It's that tax paid by individuals, you, me, families, couples and so on. The corporations pay a tax on their income, which is their net revenue, the difference between what they earn and the expenses they have. Once upon a time, the corporate income tax was significant. That is, the federal government relied in a major way on taxing businesses, not only taxing individuals. But those days are long gone. In 2015, the corporate income tax got a bare 11%. The federal government's taxation, that is only 1 in $9 flowing to Washington came out of business profits. That's because of the tax havens we talked about before the mid break. That's because of all the tax gimmicks they use. That's because of the laws their lobbyists have gotten written to allow them to reduce their tax burden. That's right. The income tax on individuals gets more than four times as much money flowing into Washington as the tax on corporations, etc. And then we come to the last one. Excise taxes like, that's like a tax on tobacco or a tax on alcohol or a tax on motor fuels. Estate taxes, which I want to say a word about, and a few other grab bags, but they don't amount to much. 9%, that's it. The grab bag 9%. The corporate income tax, 11%. And then the two big the social insurance or payroll tax for Social Security and Medicare coming in at 33% and the personal income tax at 47. I want to look at that estate tax, you know, the estate tax, the government, the federal governments, raising money when you die and leave wealth to your descendants was always justified in the history of the United States and in many other countries as a simple way to do what we call level the playing field. Right. The idea of any democracy that takes itself seriously is that kind of everybody should start in life at more or less the same place, given more or less the same opportunities, the same chances. The idea was if somebody can start life very, very wealthy and another person starts life very, very poor, then the claim that we are a society that gives people equal opportunity would have to be deemed False, Totally false. And so we invented, as people did long time ago, something called the estate tax or the inheritance tax. And the idea is, if you make money during your life, okay, you keep it, you spend it. But when you die, it isn't fair that the next generation who did nothing to earn this money should be able to start off in life with a way bigger fund to get ahead than the person who by no fault of their own, is born into a middle class or lower class or poor family. In other words, you level the playing field at the point of the death of a person who may have made money and enjoyed it, but whose children should start more or less in the same place. It's hardly rigid. It still means children born into a wealthy family will get all kinds of advantages, but it takes at least a modest step. Not in the United States, though, and not in the last 50 years. So, for example, the estate tax has shrunk dramatically across the first 16 years of this century. Today, only two out of every 1,000 estates pay any federal inheritance tax at all. You can leave millions and millions and millions of dollars to your children, and they pay absolutely nothing to the federal government and not very much to state governments either, but nothing to the federal government at all. No level playing field. So much for equal opportunity in the United States. The last question about taxes that many of you have written to me about and that I wanted to answer in today's program is the notion, carefully cultivated by conservatives, by business community and by the rich, that we here in the United States, or to be more accurate, they here in the United States, suffer from a very heavy tax burden. So that in this presidential race and in other places, there's this effort to reduce the heavy tax burden. Okay, now let's look at the reality, as opposed to the PR hustle the that comes from corporations and the rich. I will use as my source, the most respected statistical source on these subjects. It's called the oecd, Organization for Economic Cooperation and Development. They issue an annual report. The one I've been looking at is the 2015 Economic Outlook Annex Table number 26, for those of you who might want to pursue this. And they list the countries that they cover, a total, I believe, of 34 countries. These are called advanced or industrialized countries. They are more or less the better off, richer economies around the world. 34. Okay, where does the United States rank? It ranks number 30. Excuse me. Out of 31, the total number of countries is 31. The United States ranks 30th. What does that mean? We have the next to lowest burden of taxes of any of those 31 countries. The only country that levies taxes in total, federal, state, local, and that ends up with a burden less, excuse me, more than that of the United States is Korea. All the other countries put a heavier burden of taxation on their people than we do. In short, the United States taxes its people less than most other countries do. I'm going to give you the names of the five countries who tax their people the most. Ready? Here we go. Finland number one, Denmark, number two. Norway, number three. France, number four and Sweden number five. These are places where the social services people enjoy five weeks paid vacation, a national health service, free higher education, or very, very low cost and on and on and on are way beyond anything that countries who don't tax as highly as they do. But no matter how you look at it, and no matter whether you agree with high taxation or low taxation, the fact is, if you care about the facts, that the United States has cut taxes so that it is number 30 out of the 31 richest developed countries, it has just one above the lowest level of taxation it places on its people and its businesses. And for those of you that care, these are total government receipts as a percentage of the gdp. What portion of the total output of goods and services, the total income generated in a society, finds its way into the hands of the government. So for anyone to argue there's a big government taking all of our money is misleading you and carefully avoiding facing the relative low taxes that Americans pay compared to people anywhere else in the world, that is in the developed world. Okay, I want to spend a good bit of the time we have left on a problem that we have not discussed before. But that again, a number of your comments have led us to want to prepare this segment. And let me preface that by reminding you that I am very interested in your comments. We read them all. Please use our websites rdwolff with two Fs com and democracyatwork.info that's all one word, democracyatwork.inf o let us know what you think. Let us know if you can work with us to get this program on your local radio stations. Let us know if you'd like me or others to come out and speak in your part of the country, etc. Share what we do with others. Follow us through those websites on Facebook, Twitter and Instagram. Take a look at all the materials we load up to YouTube on a continuing basis. Make use of these services. That's why we keep them fresh with material okay, let's talk about gentrification. This is a fancy word, but it really isn't a complex idea. It is a word applied to a situation in a neighborhood of a city or in an entire community. When in a short amount of time, this place, this area, this neighborhood, this community goes from being a middle or low income area, middle or low rent apartments, middle or low priced homes, middle or low cost restaurants, cleaning shops, services, and suddenly becomes what gets named like high end or ritzy or fancy or gentrified. It is something that has happened very starkly in recent decades here in the United States, but in other countries as well. And I want to talk about it. I want to talk about it because it is a painful process. What do I mean? Well, we're talking about neighborhoods or entire communities where people have lived, often for quite a few generations, brought up their families, had memories of great importance to them, friendships, neighbors, communities, local churches, local social organizations. Living in that community, growing up in it, being able to raise your own children, is a very important part of the lives of those people. When gentrification happens, these people's lives are disrupted. They are forced out of their homes, out of their neighborhoods, out of their churches, they are forced to yank their kids out of schools and so on. It is a traumatic, hurtful, painful experience. And I want to drive home the economics of it. Gentrification is a fancy word for how the free market works. And it's important to understand that the free market in housing can and does have terrible social consequences. Let's take a look. When you have wealthy people becoming more wealthy, or when you have the number of wealthy people rising in a society for whatever reasonand we've had that in the last 30 years because the distribution of income and wealth in the country has changed. An awful lot of people, middle and low income, have earned next to nothing or lost out in recent decades, and that wealth has been concentrated at the top. We've had a redistribution of wealth from the low and the middle to the top. And those at the top who are gathering the wealth would like to spend it. And one of the most important things people who acquire wealth want to spend it on is their housing, their choice of where to live and how to live. And guess what? Wealthy people often would like to live in wherever wealthy people already are congregated. That's, after all, what defines their notion of being wealthy. They want to express, maybe even to flaunt, what they have earned or what they have gotten through God knows what other way. So they want to live in Those places where rich people want to live, where rich people typically already are living, often those places are limited. For example, here in New York, there's only so much space on the island of, of Manhattan. In many communities, the rich people who have been living there for a while have gone to quite some pains to limit access to their areas. We talk of gated communities, we talk of high end neighborhoods. So what are the newly rich going to do? Well, one of their favorite things is to look at the not so rich areas right next to where the high end part of the community is. If you can't go to where the rich already are because there's no place and the price is too high, go next door, go to the next street over, the next neighborhood over, cross the bridge, go to the next community, go somewhere where the prices are still relatively low and where you can take your newfound wealth and go in and buy an apartment, buy a home, and by doing that, spend money as well to fix it up. And you know what that does? It makes everybody in that area begin to say, hey, I can get more money for the apartment I have to lease out. I can get more money for the land I have, I can get more money for the home I own. To make a long story short, as wealth begins to define where it wants to go next, it drives up the prices there. And you know what that does? It forces the people who live there out. It's just as, excuse me, just as powerful, a pusher of people who've been living there for generations as if you came in with a bulldozer and tore their home down. Their rents go up, they can't afford it, the price of homes goes up. They couldn't dream of living there. The cost of the neighborhood restaurants goes up, the cost of the neighborhood cleaner and laundry goes up. You get the picture. People are forced out. That's what gentrification means. They are forced, whether their circumstances are good or bad, whether their income that year is good or bad, to leave the places that they've loved, grown up in, and wanted to raise their children in and go to new, different, strange places, usually populated by people who, who've been thrown out by gentrification from their own neighborhoods. It is a traumatic process of displacement. And what makes it happen? Capitalism. By redistributing the wealth, it creates the people who want it, and it gives them the resources to get what they want and to displace everybody else. Gentrification is the free market doing its thing in our culture. And if you don't like the outcome. If you don't think it's fair or reasonable or even socially healthy to destroy perfectly good neighborhoods in order to pander to rich people, if that thought crosses your mind, well, then you've got a problem with the free market. And what would the alternative be? As usual, real democracy Neighborhoods could be run and operated by democratic decision, not by who has the most money as a result of what economic change last year or last decade. A democratic control, a democratic organization of where we live is the alternative to free market capitalism. If you don't like deregulation, excuse me, if you don't like gentrification, well then your problem is, as it has been shown so often to be, the very economic system you live in. Thank you, as usual, for your attention. Thank you for being an interested partner with us and making use of the materials we create for this program, archived as it is on our websites and for all the other services we try to provide. Keep your emails coming, help us shape this program, make use of what we do. We are partners, we see it that way, and we look forward to talking with you again next week. Change. Change, change. Change. Fam going to change y. Sam.