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Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives. Jobs, incomes, debts, hours, our children's and what's coming down the road in an economy increasingly unstable. 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 well to offer you these economic updates about what's happening in the economy around us. Let me begin with a topic that gets a lot of attention these days, but where there is some new research to report. It has to do with discrimination in the workplace. Discrimination of men against women, discrimination of white people against people of color, and so on. If you thought that problem was behind us, you're mistaken. Obviously, in recent weeks and months we've had more and more information about that, particularly gender based discrimination. The Pew organization, which does wonderful research and polling, has just completed a new report and it came out just shortly after a very famous situation developed at the Google Corporation in which one of their employees, James Damore, was effectively fired because he publicly opposed steps being taken inside the Google Corporation to deal with gender discrimination against women. Pew decided to ask thousands of men and women about their own personal experiences. Have you seen or experienced discrimination that you could clearly identify as such? And the results were extraordinary and clear. Men much, much, much less frequently experienced or noticed discrimination. Women, I'm talking about gender discrimination here. Much, much more. They complained about it, they described it, they detailed it. It is a reality. It has been a reality for a long time. And the sexual harassment and sexual assaults are only the most extreme forms of what is a kind of generalized problem of discrimination. I don't have much to add to what is being said publicly, and I don't want to waste your time. So let me only offer one other way of thinking about that. If you organize the workplace vertically, by that I mean some people at the top have an enormous amount of power, and the vast majority of people underneath them have little or no power. And what I mean by power is those at the top have the power to hire and to fire and to promote, whereas the vast majority live with the results. They are either hired or not, fired or not, promoted or not. What this means is those at the top have extraordinary control over everybody else whose income, whose job, whose future, whose career depends on it. That's a very unhealthy arrangement. Why? Because whatever peculiarities exist in the minds and hearts of the few at the top will now shape the entire work experience, will shape who gets hired and not who has an income, who has a career or not. In the recent exposure of sexual harassment and sexual assault, we could see dramatically how that kind of power allowed those who possess it to get services from those who do not. That are disgusting, and there's no other word to describe it. But even if you don't have that kind of disgusting consequence, you do have the consequence of discrimination. If those at the top prefer men to women, you get the result. If they prefer whites to blacks for whatever reason, you get the results that our research through the Pew organization shows us. Here's an argument that flows from that. Don't organize the workplace vertically. Organize it horizontally. What do I mean? Make it democratic. Make the decisions to hire and fire something that has to be engaged by a lot of people so that even if a few are racist or sexist or have any other kind of discriminatory commitment in their lives, it will be a lot less easy for them to impose that on everybody underneath them than is now the case, because there'll be more people involved in participating in and able to raise questions about discrimination at the workplace. Not changing the way you organize it may be part of the reason why this kind of discrimination has been around for so long and has resisted other efforts to do away with it. The next update has to do with the Chinese economy. Look, I have to be honest with all of you in a way that the media in this country tend not to be. The Chinese economy is the ascendant economy in the world. No one comes close to what they've accomplished in the last 20 years. No one. And no more powerful a change in the world economy is emerging than what is coming from the People's Republic of China. And one of the ways to show that to you is to share with you some statistics that very recently came out that drive the point home. 2018, the year we are now beginning, will show all the statistics show it that for the first time, retail sales in the People's Republic of China, retail sales, that means everything sold in the way of food, clothing, shelter in the stores where people buy. Retail sales in China will equal or surpass the those in the United States, which used to be number one, which had been number one in total value of sales for more years than most of us have been alive. That is no longer the case. That is a historical change of enormous importance. Why? Well, the reasons are so many, you don't know where to start. It means that companies producing for the retail market, which most companies do, are now going to look upon China as at least as important as the United States. For their survival, for their profits, for their growth. And since the growth path of China is much faster than that in the United States, the years ahead will only make the difference greater. The Chinese economy will become more important to the producers of food, clothing and shelter. Their profits will become more dependent on keeping their markets in China, which means accommodating to the Chinese demands for how you do business there, accommodating Chinese political objectives, domestic and foreign. If you want to understand why Mr. Trump, like his predecessors, has had to qualify his noisy protestations about the Chinese, it's because the economic reality of their importance is making every American corporation selling in China, and that's most of our big corporations, the allies of China. Why? Because they don't want to disturb the relationships with a country that has become this important. Let me give you an idea of some of the implications of all of this. First, why has the Chinese economy zoomed up so that it's as big in terms of retail sales as the United States? Well, let me just give you the last 10 years, 2008 to 2018. This has been a time of difficulty. Global capitalism crashed in 2008. The last 10 years will be. They already are being called a lost decade because the wages of Americans went nowhere over those 10 years. We're not earning that much more today than we did 10 years ago. On average, the super rich have done fine, but everybody else, not at all. We've documented that, as have others for many, many months. But over the last year, in the Chinese economy, which was also hit by the crash in 2008, their response has been completely different. And there's no nice way to say this, infinitely more successful. The per capita income in China 10 years ago was roughly $2,000 a year. The per capita income in China today is roughly $88,000 per person per year. The Chinese economy has quadrupled its productivity in that time. The United States, nothing remotely like that. That's why the lines are converging and that's why the Chinese are taking off. It means that an American company is now more likely to advertise in China than in the United States because. Because it's a more important economy for them. They're going to hire Chinese graphic designers. They're going to hire talent in China to help them figure out how to do what advertisers have to do in a retail environment. They're going to hire people to work with the public. They're going to what? They're going to endow university chairs in Chinese universities to get their products and their companies known in the academic world. They're going to be doing in China more and more of what they used to do in the United States. The world economy is changing, and mostly here in the United States, what we have in coping with that is denial, the pretense that this isn't happening and that it won't have all kinds of consequences. Let me drive the point home with a couple of more statistics. Last year, in 2016, the last year for which we have data, 17.6 million vehicles were sold in the United States. That's a lot of vehicles. 17.6. Keep that in your mind. How many vehicles were sold in the People's Republic of China in 2016? 24. Let me do that again. 17.5 million vehicles sold in the United States in 2016. 24 million in China. Which is the more important market for the automobile companies now and into the indefinite future. China. For American car companies who currently sell one out of five cars sold in China sold by an American company producing there. That is their future. That is their future. They are going to be working very hard to make sure that the United States government, whether it's Mr. Trump or anybody else, doesn't mess with that future, because it's the survival of these car companies that is at stake. Multiply that by all the other industries in a similar situation and you begin to understand that whatever the diplomats and the politicians do, the underlying economic dependence of American corporations on the enormous Chinese economy will shape what happens in the years ahead. A lot more than most Americans are led to believe by a media that prefers denial over facing these realities. The next update has to do with a research paper just released by the Federal Reserve bank of San Francisco. It covers 16 countries and does the kind of research that Thomas Piketty is famous for. Here's the research and the results of that research, and you can get this paper by going to the National Bureau of Economic Research, Nber and looking for it. It's a recent paper and it has to do with inequality. And here's what the paper Capitalism as a system produces ever worsening inequality. It does that across all 16 countries that the Federal Reserve paper studied and over many, many decades. Here is the pattern repeated everywhere. Capitalism produces widening inequality. Eventually the inequality becomes so extreme that there is a kind of explosion. The mass of people who are more and more falling behind won't tolerate it anymore. Partly because they are falling behind. They can't buy the output of this economy, which therefore suffers a crash. Partly, the mass of people are angry and bitter at the Inequality being imposed on them. By the way this system works, then you have a short period of time of upheaval to deal with the crash and to deal with mass resentment about inequality. And for a few years, the inequality shrinks. It is kind of stopped for a while and even reversed. But because the changes made in these periods of contraction are marginal, are merely reforms of the basic system, as soon as the crisis passes, capitalism resumes what its march to ever greater inequality. And then the whole thing is repeated in the last hundred years in the United States, we had that leading up to the Great Depression of 1929. From 1929 to 1945, depression and war, inequality shrank as soon as the war was over. As soon as we were done with that period, capitalism resumed, produced another rising inequality until it all crashed in 2008. Sound familiar? It's the same story everywhere. And what's the point and the punchline? We, we, the people who live in capitalism, have tried to reform the system. With each of these rising inequalities, we've tried to take steps to stop it. With each of the crashes that reverse the inequality, we thought we had achieved it. Until the next upswing of capitalism returns us to the kind of inequality we're living with now. The message here is reforms, adjustments to the taxes, minimum wages, all these things don't solve the problem. The problem is a system which generates inequality over and over again, punctuated by very difficult crashes, the great 1930s crash, and the last 10 years of a lost decade. The real lesson to be learned is you got to change the system or else you're condemned to. To repeat this pattern documented by the Federal Reserve bank of San Francisco's latest research. Before continuing, let me remind you, as I often like to do, that we maintain two websites where we provide all kinds of extra material of the sort that we do on this program. Those websites are available to you without any charge whatsoever. 24, 7. Please make use of them. They are our way of partnering with you to extend the reach of this program and indeed the reach of everything we do. The first website is democracyatwork. All one word, democracyatwork.info the second website is rdwolff with two Fs. Democracyatwork.info rdwolffwith two Fs.com those websites allow you to communicate to us what you'd like to see on the program, allow you to follow us on Facebook, Twitter and Instagram. These are real useful websites. Make use of them. That's why they're there. And for Those of you that listen to this program on the radio but might be interested in seeing it as a television program since it is both, let me urge you to go to patreon.com P A T R E O-N patreon.com economicupdate the name of this program that will allow you to see this program as a television program whenever you wish. These are ways we have developed to reach further to share this information with more folks. Help us do that. Partner with us. We invite you, we urge you the next update has to do with immigration, a burning topic, never more so than these days as the Trump administration tries to deflect people's upset about the economic and political realities of our society by acting as though getting rid of immigrants is going to solve much. So let's talk a little bit about immigrants. First of all, this notion which I need to deal with, that we ought to have immigrants that are highly educated rather than immigrants that are not. Let's go into that. Number one, it's bizarre coming from Mr. Trump, who wants to make America great again. Because if America was great because that's what it means to make it great again, then it had to do that greatness with a flow of immigrants the likes of which no other country on earth has ever had. So when we were great, it was. We were a country of immigrants. And guess what? From the beginning, the overwhelming majority of immigrants had no formal education whatsoever. They were uneducated people. And it took the United States to show the world that you may be uneducated in some ways, but. But you have lots of ingenuity, lots of skill, lots of commitment, and lots of hard work that can make a country great. What in the world is the lesson you draw from that? It's not the one you hear in the newspaper, but there's another economics of immigration I want to drive home. Let's suppose the United States were successful in getting educated people to come into the United States. Let's go over what that means. The country in which you are born and in which you go to school spends a great deal of money providing you with an education. It is very expensive to have schools, hire teachers, provide learning materials, etc, etc. What in the world do you think we're doing to the rest of the world if we outsource the costs of education to every other country in the world and then say, when you get to be 21 years of age, or 25 or 30, then, then you come to the United States, the other country bears all the costs of giving you Productivity. And the United States gets the benefit of all the productivity you provide when you work. That's a way of making a rich country, the United States, richer, and the poor countries from which these educated people come, even poorer. They have to bear the costs of the education, and they don't get the benefit because the person leaves. That's a real serious problem, and it has been a serious problem for a long time. To act as though there's no cost to the rest of the world means that you're going to make the inequality in the world between rich and poor countries worse by this sort of immigration. Take everybody. Otherwise you haven't learned the lessons of history and you're not doing the world right now any good whatsoever. Inequality between men and women we've talked about. Let's talk about the inequality between black and white. I know a lot of people don't like to hear this, but every now and then it's really good. Let me give you the results of all the statistics that have been done for 2016, the last year for which we have it. I'm going to compare black and white. Three statistics, real simple. What's the ratio between what white people earn and black people earn in their jobs? Median hourly wage, 50% people get more. 50% people get less. But it's a good way to compare. Black people get 75% of what white people? Median hourly wage. Okay, now let's move to the household. What's the median household income when you put together what husband and wife or partners are both earning now, already we're Starting to shrink 60% African American median household is 60% of the white one. But now we get to median family net worth. How much property, how much wealth does the family, the average family, the median family, have? And remember why the wealth of a family is important. If you have a sudden illness, if you have a sudden accident, if something in life happens that costs a bunch of money or that interrupts your work so you don't earn income for a while, you turn to your savings, your wealth, to see you through a hard period. In 2016, the median family net worth of a black family in America, we was 10% of a white family's. White families had 10 times more wealth to turn to if something unfortunate happened to them in their job, in their health, in their personal life, with a divorce or whatever it might be. This is a capitalism that has not overcome inequality. It's a system that discriminates. It's a system that systematically puts African American people at a disadvantage. There's no way out of that. And one of the consequences is in a way, my last update for today, one of the consequences of that inequality. And this has to do with a report issued in January 2018 by the United States Civil Rights Commission, a government body in Washington. And it talks about the name of this report, Public education Funding Inequity. And basically, here's what this report that students from ethnic. That's a nice way of saying not white students from ethnic and poor neighborhoods. Guess what they get. Poor schools, poor education, low spending per pupil. In other words, we haven't lived up to the so called promise of America called equal opportunity. We haven't given people from poor backgrounds, from poor families, people who have 10% of the net worth that white people have. We haven't given them a way out by giving them decent schools. It's not that we haven't given them extra schooling which would help get things equal. We haven't even given them equal schooling which couldn't have been expected to undo the other inequalities. No, we've done worse than that. We've provided them, according to this report, poorer schools, poorer quality educations than we have provided to the white folks in this society. In other words, American capitalism, criticized in the past for the racial inequality that has been so bad a problem in our society has not only not solved that problem, but here we are half a century after the famous 1954 education decision of the Supreme Court that said separate and equal is not possible, that if you're separate, you're going to be unequal. That was wise of the Supreme Court. Then 50 years later, we see how wise it was. This is a system that can look nowhere else to explain the racial tensions, the racial inequality, the racial conflicts that beset us as a nation doesn't have to look anywhere else but to the economic system we have. It has failed to overcome that inequality. It has failed even to live up to the commitments its leaders have made to remedy the discrimination, the inequality, to live up to what its own Supreme Court said was the law of the land, at the very least, give equal education to the unequally treated people in our society. This system didn't succeed. And one more educational reform is going to be no more successful than than all those we've lived through over the last half century. The system that works this way, that thwarts and frustrates all these reforms is the problem. You've got to change a system, give everybody a decent job so that we don't have the inequalities to begin with, and the rest can begin to be addressed. We have a long way to go, but denying the systemic problem is no way forward. We've reached the end of the first half of today's program. Please stay with us. We will be right back after a short interlude. Welcome back, friends, to the second half of Economic update. Well, I am very pleased today to welcome to the microphones an old friend, a former student, and now for many years a very valued colleague. He is Dr. Richard McIntyre. He's a professor of economics and chair of the Economics Department at the University of Rhode Island. He is co director of the University of Rhode island and in Cuba program and held the Chair of the Americas at the University of REN2 in France in the spring of 2017. He is the author of Are Worker Rights, Human rights, published in 2008, and co editor of the book We're Going to Talk about today, Knowledge, Class and Marxism Without Guarantees, a book published in 2018. He's also the author of many academic and popular articles across a range of topics in political economy. So, Rick, if I can call you.