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Sam. Saint gonna change. Welcome friends, to edition of Economic Update, a weekly program devoted to the economic dimensions of our livesour jobs, our incomes, our debts, those of our children, those looming as we look down the road. 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. Well, Here we are 2016 and our economy is sputtering. The signs are everywhere. The major disappointment of the retail big corporations in America that their last few months have not been good. The fact that in most cases Americans are unable to buy the way they have in the past. Now some commentators profess mystery. They can't understand it. So I'm going to help them as well as explain to all of you that the answer here is very simple. Number one, the fall in the unemployment rate that otherwise might have led people to be able to spend more money hasn't worked that way. Partly because the fall in the unemployment rate is a mirage. It's not a measure of how many people really have jobs, it's a measure of how many people are unemployed. And when people give up looking, they're no longer counted as unemployed in in this country. And that means we see a falling unemployment rate. But in fact what it reflects is large numbers of people that have given up and those people don't have money to go to the store and buy much of anything. Number two, those people who are getting jobs are getting jobs at much lower pay than they used to have in the jobs they lost. It's clear from all the statistics, which means that even when people get back to work in this country, few of them as there are, they're not able to buy the way they did before. And you put these two things together and you can understand why stores are not selling in anything like what they had hoped might happen. And if stores aren't selling goods and services, guess what? Companies that invest, that hire workers to produce goods and services have no incentive to do so in a profit driven system. Because the only reason a capitalist hires workers or buys more inputs is if that capitalist believes profit can be earned by doing that. And if people aren't buying, the profit isn't there. And so the problem of a lackluster so called recovery continues. And the signs of it getting worse before it gets better are rising as well. Let me turn to some of our burning updates of the time and I'll try to be cute this time as well as precise. I really can't not tell you about the next item. Most People listening to this program have a pretty good idea of what the word Budweiser means. It is the name of what has been the largest beer selling in this country in the United States for a long time Back a few years ago, the Budweiser Corporation, originating in St. Louis, Missouri, thought it would be more profitable to the people who own and run the business if they sold it to another corporation. So they did, a company called InBev, which is actually a Belgian company that is based in the European country of Belgium. So the idea that nothing could be more American than a Budweiser beer turns out to have been an inaccurate statement because a Budweiser beer is a Belgian beer. For the last several years, as this became known, apparently the pressure rose inside the Budweiser folks here, now being a subsidiary of InBev from Belgium, the that they needed to shore up their nationalist profile. So they've done that. They're making an experiment, and I wanted you to know about it. From May 23rd through the general election in November, that's their choice. They're changing the name of their beer. From May 23 to the election, it will not be called Budweiser. Instead, it will be calledand I didn't make this up, folks. America. That's right. The can will say America, not Budweiser. And instead of the slogan that appeared on the Budweiser can, king of beers, the new slogan will be E pluribus unum, which is the same phrase that occurs on the currency of the United States. And they went even one step further. On the Budweiser can, printed up above is the recipe for brewing the beer that's going to be gone. And instead we're going to see printed on the can the lyrics of the Star Spangled Banner. Okay, just remember, this 100% American beer isn't American when you enjoy it or can't quite believe what you're drinking, depending on your perspective, but American it isn't. And when it says so, that doesn't change anything. I want to turn next to an interesting new book. Interesting perhaps for reasons other than what you might expect. The title of the book is called Coming of Age. In the other, it is a joint product of three sociologists, Kathryn Edin, Stephanie DeLuca and Susan Clampett Lundqvist. They spent 10 years living and working and studying parents and children who resided in a Baltimore, Maryland, public housing project. They were trying to figure out what enabled young people living in that project, mostly minority young people, what enabled them to escape the poverty of that project. All of the adverse social conditions that they faced, which young people were able to escape and which not, and what lessons that might teach. One of the first lessons they found was that living in a neighborhood like that, an impoverished neighborhood and an impoverished family turns out not to be good for the prospects of a young person. Those young people who moved out of the project because father or mother or both got jobs that enabled them to do so did much better later in life because they had gotten out of that condition. They did, however, discover that even some of the people who got out fell back in later. That is, there were traces, let's call it, of their difficult upbringing in these difficult projects. And so even though they got out, they moved, they fell back into conditions of poverty or difficulty, often because relatives had crises who still lived in those projects, and they tried to help out. Sometimes they had an illness or a problem and there were no funds extra in the family to take care of it. And so it turns out that if you have a poverty condition in a housing neighborhood, the damage you do is not just to the people living there now, but it's to their children. And it's not just to those children while they're there, it's to those children pretty much for the rest of their lives. Are there a few escapees? Yes, there are some who make it out, but the majority do not. The vast majority do not. What do these authors then conclude? And this is what I want to draw your attention to, perhaps more than anything else. The authors recommend initiatives that might help transform poor neighborhoods. They propose regulation for the for profit schools because a lot of these young people end up trying to get out of their situation by going to these for profit schools where they are, not to put too fine a point on it, ripped off. Many of them can't afford to go to a college and so never have the chance to move up by that means. So these authors recommend increasing college help and funding for folks at the bottom. Why am I bringing this up? Well, for two reasons. What the authors have found is not new. What the authors have documented is what many of us have known for decades in the United States. Indeed, the title of their book, coming of Age in the Other America, reminds us that in 1960, that's half a century ago, Michael Harrington, a very famous thinker in America at that time, wrote a book called the Other America, in which he documented for 1960 how the other half of the United States, and he meant it the other half, the other 50% lived, and they lived in conditions very similar to what this new 2016 book finds in America again, and Michael Harrington recommended the kinds of adjustments these authors are. So I conclude from that that these kinds of adjustments are too little and too late. They are reforms that change the edges of a system, but do not change the fundamental system. That's why 50 years ago we have the other America, and now we have coming of age in the other America. And they describe pretty much the same conditions, the same barriers, the same tragic stories of so many lives, and yet they can't come up with anything other than than the same proposals made back then. It won't work. The conclusion I reach, and that I would urge you to think about, is that the problem of having people who are very poor crammed into bad neighborhoods, poor housing, that problem is obvious. And the solution to it is pretty obvious too. We shouldn't have people like that. There should not be people earning so little money that they have to live in these conditions and condemn their children to have all the normal problems of life plus all the extra ones that these social conditions impose on them. Stop changing the edges of the problem and go to the root and the core. There shouldn't be a distribution of wealth as unequal as we have it. There shouldn't be a distribution of income as unequal as we have it. Were you to do something about that, then you would do away with the very conditions that such folks are forced to live in. And then maybe we would finally not have every few years another study documenting what we knew and proposing changes we know aren't enough. The next update I want to bring to your attention is also a written report. This one is not a book, but it's a report by a very famous European student of business. I want to introduce her to you first and then tell you what her recent report finds. Her name is Virginie Perrotin, French. Virginie Perrotin is currently a professor of economics at a British university, Leeds University Business school in the United Kingdom. She specializes in the effects of firm ownership and governance on how companies work. I want to read to you her list of previous jobs she's held ready. She's had positions at the International Labor Office, the London School of Economics, the Centre des Tudes des Revenue et des Couts, which is a central office in the French Prime Minister's office in Paris. She is a professor who has also acted as a consultant to the European Commission, the World bank and the oecd. You really could not get a more prestigious resume of a professor of business wherever you looked. Okay, what is it that she's done? She's written a report. It's called what do we really know about Worker Cooperatives and it was published by Cooperatives uk. If you're interested in looking it up on the Internet to find out the details of this report, I can also give spell out her name that you can find it that way. P E R O T I N so what were the conclusions of her report? What do we really know about worker cooperatives? I'm going to read them. They're not many to you and I believe they will perhaps adjust your thinking about what's at stake in moving from an economy that is dominated by corporations with an undemocratic top down structure where a handful of major shareholders have the power, they elect the board of directors and together the major shareholders and the board of directors, a group of 10, 20, 30 people in most corporate cases. They make all the decisions what to produce, how to produce, where to produce and what to do with the profits that everybody's labor helped to produce versus a worker co op where all those decisions are made democratically. One worker, one vote. Bringing to the economic system the democracy that has so far been kept from it. She examined the two kinds of enterprises. Europe has many more worker co ops than the United States. Absolutely and proportionally. So she had much to study around the European situation. So here we go. What did she find? And by the way, she studied co ops in Latin America, United States and so on. So it's a general conclusion of years of study. And she also studied existing data on worker owned and run businesses and compared them to conventional businesses. Here are her conclusions. 1. Worker cooperatives are larger than conventional businesses and are not necessarily less capital intensive. Let me explain what that means.