← Economic Update with Richard D. Wolff
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- [00:10]
A
Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives, jobs, incomes, debts, hours, those of our children, those looming down the road. I'm your host, Richard Wolff. I've been a professor of economics all my adult life, and I hope that that has prepared me to offer these analyses of what's going on in the economy all around us and the economy we all depend on. Before jumping in, two quick announcements. We've changed our mailing address, our post office box. Please go to our website, democracyatwork.info and there you will find the new post box box for those of you that need to mail anything to us from now on. And I also want to remind you that if you're interested in participating in a group that acts on the kinds of analyses we present in this program, or if you'd like to start one in the community where you are, please know that we work with you to do that. Just go again to our website as action.dedemocracyatwork.com and there you can find all the ways to proceed if that is something that interests you and where we can be of some help. Well, I want to dedicate our program, at least our first half today, to the notion that there are a lot of ways that a capitalist economic system keeps itself going. And one of the most important is to tell stories to make the flaws, the failures of that system either disappear or look very different from the way they actually are. And we're going to do a number of examples of that situation. Let me begin with something called the labor force participation rate. It's a number that governments around the world keep, and it's simple. It measures the percentage of people of working age who are actually in the labor force who are either working or looking for work. It's a rough measure of how many people in your society are workers of one kind or another and are actively playing that role. And here's an interesting result that was recently reported by the oecd. And indeed, you can find a good story by Martin Wolf, no Relation, in the financial times of July 17. It turns out that the United States ranks very low. In fact, there's only two countries of the major economies looked at, Italy and South Korea, that rank lower than the United States. Most of European countries rank much higher. Now, what does that mean? It means that in European countries, Sweden, France, Germany, England, you know, the percentage of working age people who are actually working is significantly higher than in the United States. And why is that important? Well, the answer is very important in Itself. In Europe, the government provides enormously larger quantities and qualities of public goods to people. They subsidize education, they subsidize housing. They have a national health service. Every one of these countries that is far more comprehensive and generous than anything that exists in the United States. In other words, the welfare system, the social welfare system, the general supports people get from their government is much higher. And by the way, correspondingly, so are their taxes. And here in the United States, the argument is heard from conservatives all the time. And by conservatives, I mean both Republicans and Democrats. The argument is you can't provide people with all these services because you know what they then you take away their incentive to work. It's part of the idea that the country can be divided into those who work hard and those who are just takers. Well, the statistics prove otherwise. In Europe, where they give people much more in the way of public support and tax them more, it turns out that the higher taxes and the higher supports don't make people more, work less. That's been a lie. That's been a misinformation put out by conservatives for a long time. It turns out that Europe shows us that if you give your people more supports, they work more, not less. So what is the reason that story is told in the United States? It's a cover. It allows the rich to gather more and more into their hands and to justify taking away parts of public services from the mass of people on the spurious and untrue argument that if you do that, they become dependent and don't work anymore. It's not true, never was. And now we have the statistics to show it. Here's a small example of a capitalist system making up things in order to fool people. In New York State, there is a tough race in the Democratic Party between the sitting Governor, Andrew Cuomo and a very important challenge to her from Cynthia Nixon, an actress from the Sex in the City television program that many of you know. Now, Cynthia Nixon is like Bernie Sanders and folks like that that are challenging the old core of the Democratic party of which Mr. Cuomo is a charter member. In this struggle, I could not get over learning that close associates of Mr. Cuomo have been recorded as giving many, many $1 contributions to the campaign of Mr. Cuomo. I wondered to myself, why would they do that? Why would one person give many $1 contributions rather than the usual RA rich person's contribution of 10,000 or whatever? And the answer is, nowadays it's bad for wealthy corporate rich people to be exposed for what they are. So by having his associates and friends give $1 contributions, he can claim that the average contribution is low and thereby suggest he he's somebody supported by average people who can only give one or two or three dollars. It's a stunning example of how you manipulate when the system itself can't be revealed for what it is, which is that most politicians get most of their money from a tiny core of big corporations and wealthy individuals. And now here's another example of the system kind of hiding from us how it works here. The statistic is an alarming one in ways I think you know, because we've talked about it on this program too, that malls across America are dying and that one of the reasons publicly given for why this is happening is that Americans are turning to online ordering and getting this stuff delivered rather than driving to the mall to buy it there. Well, behind that is another truth that doesn't get much exposure. The fact is it's cheaper and Americans don't have the money. And if they have to choose between driving to the mall with a car that's expensive, using gas that's expensive to pay prices that are higher than what you can get if you find it on the Internet. Well, in a pinched economy, which is what ours is, you, you don't go to the mall the way you did. Why am I telling you this? Because today this story is also the same story. It turns out that we're not going to restaurants the way we used to. Americans are ordering their food delivered to them more and more than they ever have before, which is threatening the restaurants of this country because they can't really do what they were set up to do. They can either survive by becoming delivery services or they will be outmaneuvered by delivery service food enterprises. And what's driving that? Two things. One, again, the inability of Americans to afford going to a sit down restaurant. Delivery food is cheaper, just like ordering instead of going to the mall is cheaper. It's a pinched economy. The reality of a capitalism that isn't working really well shows up in shifting to distributed delivered food. But there's a second reason. Angry workers have been successful in pushing up the wages that were terribly low of food service workers, waiters, waitresses, the folks that work in restaurants. So you're pinching the profits of those companies from below by having to pay decent wages. And you're pinching those companies by having a population that doesn't have enough to go to a restaurant solution, deliver the food. And you know what that means, friends? It's another contraction of the range of enjoyments you can have in a system that can't provide them to you. So you're going to stay at home and put the food on a paper plate and have that. Not going to have the restaurant experience anymore. Because that's the way capitalism works. It's right up there with statistics showing that our cars are getting smaller, the square footage in our apartments is getting less. The working class of this capitalist system is being reduced, declined, undone, and the restaurant story is just a part of it. 2. More housing. California is facing a housing crisis. What is it? Rents are too high. People can't afford a rent. The unemployment problems are now compounded by a homeless problem. People who can't afford the rents that are going crazy. And why? Because of a capitalist housing market. What do I mean? Well, I mean a housing market that is governed by the market. You know what that means? The market runs the housing system. It means that houses are distributed. Homes, apartments, the way a market distributes everything. It goes to the person with the most money. If you and I both want the one ice cream cone that's left, we bid against each other. That's how markets work. I offer a bit more. Well, then you counter and you offer more. And I keep doing that and you keep doing that until we reach a point where one of us can't afford it anymore and the ice cream cone goes to the person with the most money. Housing is exactly the same when it's run by the market. Housing goes to those with the money. And those who don't have enough money, may they have more children. Sure. Do they have a greater need because of their social situation? Perhaps. Is it unethical to give the stuff that's scarce only to those with the most money? Most systems of ethics and morality would say so. But a market doesn't care. You got the money, you get it. You don't have the money, you don't get it. It's a method of distribution that you ought to think about. And in California and in other parts of the country, it's producing a serious homelessness problem as people are forced out of the neighborhoods they need they were born into, where their children are going to school and have their friends. Lots of things a community could be that are not available to it because the market is yanking the property away from those who can't afford it and giving it to those who can spend the money. That's what a market system of housing is. And here's the last myth to explode a way in which capitalism behaves that it has to hide. A recent study done by the Federal Reserve bank of St. Louis, published in 2017 and an update here in 2018 that will soon be published in the American Journal of Economics and Sociology looks at the wealth gap between white and black Americans. And it comes up with an interesting result. That gap has grown worse across the Obama administration and it continues to get worse across the Trump administration. And that's interesting because of a particular other statistic that goes along with that. Black Americans are closing the gap between the level of education they achieve and that achieved by whites. In short, black. Black Americans are rising in the level of education they are able to get relative to whites. But it is not helping them reduce the gap in wealth and income between black and white. And why is that important? Because one of the myths the make believes of a capitalist system is that it isn't the problem of capitalism that keeps black and whites so different in their economic well being. It's a problem that could be solved by education. Education will solve the problem. No, it won't. It hasn't. You know why? Because whatever the benefits of education, they're not strong enough to overcome the divisions that capitalism creates the between people. So black people get more education but they have to go into debt more to do it because of the wealth distribution. Capitalism produces divisions and injustices and neither education nor anything else covers it over. Well, that does it for the first half of the show. We will be right back. Welcome back. Welcome to today's second half of Economic Update. Before I turn to our guest, Dr. Harriet Fraad, I wanted to make a few quick announcements. Please remember to subscribe to our YouTube channel for those of you that engage with us in that way. And likewise, check out our social media exposures, Instagram, Twitter, Facebook. And a special word of thanks to the Patreon community. Your support is extremely important and enables us to bring this kind of work to everyone on a regular basis. And we just want you to know that we appreciate it. Well, our guest today is Dr. Harriet Frad again as she is with us at the beginning of every month. She is a mental health counselor in private practice in New York City. She writes extensively on the intersection of economics, psychology, personal and intimate life. She publishes widely in a number of books and articles that we have available through the website where you can find her. She also has her own website, harrietfraud. F R A A D harrietfraud.com thank you very much again for joining us today.
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B
Thank you for inviting me once again.
- [16:13]
A
Well, today our topic is fertility, sort of the if I understand correctly, the rate at which our population does or does not grow. And one of the reasons we're talking today is because you really surprised me by letting me know that the fertility rate, the rate at which our population is growing, is lower now than it has been in many, many decades. Yes, and at one of the lowest points in the history of our country. And I think that this is a vitally important matter because how the population does or doesn't grow is a crucial shaper in how many workers there'll be, what kind of economy we'll have, what the quality of life for people will be if they're growing as opposed to not. So could you begin by telling us whether I've got that right about fertility and. And what is at the base of why this is happening?
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B
Well, first I want to mention that it's very important for the reason that it's been written about and demographers are upset about it, is because the way things are structured is that the wage workers of today are helping to support Social Security of tomorrow. And if there aren't as many wage earners and Social Security has increased as the population ages, you have the potential for old people being pitted against young people and vice versa. Of course, that is not necessary. You could get the money from taxing the wealthy or their loopholes and hideaways for their money, which are legal or corporations, or reducing the military budget. But as things go, potentially the way it's used, it could polarize the youth against older people.
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A
You know, it may help everyone to understand that our Social Security system is a kind of pay as you go system. Not all systems are the same. So, yes, young people in their working years put money into Social Security, and then the government holds that, builds it up by investing it basically in government bonds and so on. So that when you retire at 65, 6, 7, or 8, and in a sense, the money you've put aside, the government has taken from your check and put aside for you is then paid out to you. And so the available funds to take care of the old depend on the money coming in from the young people, because we hope it all kind of balances out. If there's a decline in fertility, it won't balance out because the money coming in from the young may not take care of what's being done. And the question is, how do you respond to that? So that's just one way in which this is very important.
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B
It is very important.
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A
Well, let me ask you the hard question. Why is this happening? Why is the rate of growth of our population low, shrinking lower than it's been for a long time.
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B
There are a lot of reasons. The most important, I think, is precarity. In order to have a child, you have to trust in a future. You're creating a future person who will be a worker and a producer in your society. You have to feel, since children are helpless and can't help you, we are the most dependent animals for the longest time. You have to have some financial and emotional security. Americans have none anymore in terms of financial security. People are in very precarious condition. 60% of Americans don't have $1,000 in the most dire emergency. And by that I mean they get in a traffic accident, they're arrested, and they'll go to jail and ruin their life because they can't find the $1,000 of bail or to get a lawyer. And if they break some teeth, they'll be in horrible pain rather than get their teeth fixed. They don't have that money. People are very desperate economically.
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A
That translates then into a decision either to postpone or not postponed forever or.
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B
Not or Postponed temporarily. And 82% of the workplace hasn't had. I mean, people are employed, but at lower wages and so that they can't afford to sock money away and feel secure on an economic level, emotionally, that's matched by precarity. It used to be that if you were white and male, you could get a family wage, support a family. You'd have security on your job. No, you don't. And so you don't have a secure job. And marriage is much less frequent than it used to be because people don't have the wherewithal to settle down in a household. 50% of those people who actually do get legally married get divorced or legally separated, and another 15 or 20% just split because they don't have assets to fight over. So you have a massive desertion. Marriage has become a luxury good for those people who can afford because they afford it, because they're skilled enough, educated enough, or personally rich enough that if they lose a job, they'll get another one.
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A
So tell us then, I mean, I want to pick up on this. Who is having children and who isn't. I understand the overall rate is very low and shrinking.
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B
That's right.
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A
But within the overall average, that's falling. I assume there are some people that are having children and others that are not. Tell us a little bit about how this breaks down.
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B
That's right. There are some that are having others that are not. And the not group way outweighs the having group. The people who are having children are first generation immigrants who are having fewer than they used to. But they are having children until they learn how expensive and difficult it is. And then the second generation catches on and doesn't have children.
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A
So. So it's fair to say they bring in a sense the child focused lives they led before they got here. And it takes them a generation or so.
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B
Right. They think that their children will be an asset, that they will help them. These days, more and more old people have no help at all. Their children are dispersed or so overworked that they can't afford to help the old people. There's a reality that this doesn't work.
- [22:59]
A
There's a footnote here that it seems to me important. If one of the few groups in the country that is having children are first generation immigrants, then the Trump administrations and indeed the Obama administration did this too, expelling immigrants. Obama did it, Trump is doing it more. That's actually going to worsen this fertility problem because it's removing a population that was producing young children that would grow up and work and put into the Social Security system and so on and.
- [23:34]
B
So on, and a group of hard working people as well, immigrants. So you are just like with a lot of other decisions in the administration and previous ones, they're not thinking of the ramifications of their decisions, what might happen. They're just catering to their base, which is a rather base base to which to cater. So the other group that's having children are the top tier of our economy, the top 10%, especially the top 1%. And they are able to have children because they can afford nannies, paid vacations, meals out, takeout food, dog walkers, massagers, fitness trainers, party planners for their kids in their own party caterers, and all the other servants who perform services for the top. They can buy those services and therefore they can afford to have children. The top 1% is having numerous children. They're the only group who isn't having children is the vast middle and lower middle. Although more poor people are having children than used to. Not at all enough to balance it because they've closed Planned Parenthood, the only affordable reproductive care. They've closed abortion clinics in 89 counties. You can't get an abortion in the United States and therefore people at the bottom can't afford the birth control or the abortion they needed not to have children. And those are often the most resented and deprived children. However, even they are not having as many children.
- [25:22]
A
So you have in a sense the Extremes. Mostly it's the extremes. Poor and rich that are having the children and the vast in between that are not. And the fundamental reason is the precarity of everybody's financial and emotional situations in terms of planning life. What are some of the consequences that you would kind of focus us on that we can expect to flow from this reduced fertility?
- [25:52]
B
Well, I'd like to go back a little bit and say that there's a combination of things because marriage is breaking down in many Western industrialized societies, but they don't have the same level of quick shift to a lower population and quick shift to a lower fertility rate because they support parents. The biggest reason people give in the. There's a big study by the New York Times of thousands of people and the reasons they give for not having children. The biggest one is the unaffordability of childcare. Childcare is free or heavily subsidized throughout Western Europe. It's not in the United States. And the lack of benefit. We are one of five countries in the world that doesn't have paid maternity leave. We're in the company of Lesotho, Swaziland, Papua New guinea and Somalia and the United States, we're the fifth. And we don't have paid vacations. We don't have paid family leave. We don't have paid maternity care or health care.
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A
These are. You mean as matters of law, the.
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B
Way everyone else in the Western Europe has access to these things?
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A
Here, it depends on whether your employer.
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B
Does it or not, and most employers don't. Child care here is prohibitive. The average cost of childcare is $11,666 a year. In big cities like Boston, New York, San Francisco, it's up to 20,000. In places like Mississippi, which are much poorer, it can be around 4,000. So that what you're talking about is the average salary. Actually, the median real wage in the United States is $31,000 and something. If you take more than $10,000 off of that, what do you have to live on for the whole rest of your life? And so that you really. People can't afford child care. People are going to horrible extremes for themselves and their children, leaving children in kennels, leaving children at home alone where they could get arrested for it, but they can't afford it.
- [28:09]
A
Well, you know, I mean, we've come as often we do at the key moment. We're running out of time for this part of the show. But I do want to remind folks of something I remember from a Bob Dylan song.
- [28:21]
B
Me too.
- [28:22]
A
That you've hurled the worst curse that you could ever hurl. The fear to bring children into the world. What kind of a society produces conditions and doesn't face them that have this result? Thank you very much Dr. Fraad. For those of you that have been with us, I hope you have found this as interesting as I have. And of course, let me remind everyone that this conversation will be continued on our patreon.com economicupdate website as well. I look forward to speaking with you again next week.