← Economic Update with Richard D. Wolff
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Sam. Saint gonna change. Welcome, friends, to edition, you might call it even, the Thanksgiving edition of Economic Update, a weekly program devoted to the economic issues, the incomes, the debts, the jobs that we all have, that we hope we will have in the future, that we hope our children will have. And there are more and more questions about it these days, aren't there? I'm your host, Richard Wolff. I've been a professor of economics all my adult life. I currently teach at the New School University in New York City. I want to begin today's Economic Update program by responding to some questions that came in over the last week about comments I made a week ago regarding corporate taxes, since they are scheduled to be lowered by Mr. Trump's government when he comes into power in January. And it's likely to happen, everyone says, because Mrs. Clinton was also in favor of lowering corporate taxes. And so perhaps the Democrats will go along with it. I don't want to repeat what I told you all about last week there. The key thing was to understand the difference between the nominal rate 35% in this country and something called the effective rate, what companies actually pay attention out of their profits, which is much lower than the 35% because of the deductions, the exemptions, the legal ways they have to get around the taxes they owe. And I told you then that the average is rumored to be because there's different ways of calculating it in the neighborhood of 22, 23% as the effective average rate of American corporations, which is not very different from what it is in most other countries. And so the argument that we are bizarrely higher because 35% is nominal and that's higher than the nominal in other countries. The truth of it is it doesn't matter because we give corporations more exemptions and deductions. That brings the nominal down to the effective. Well, some of you asked about more specifics. And so I found, and I'm going to tell you where it is, some work done by the Standard and Poor corporation with Global Market Intelligence Unit. Standard and Poor is a major company in this country that studies risks and evaluates the riskiness of securities and so on. Their Market Intelligence Unit produced some statistics which were then carried in an article in the New York Times on November 13th. So if you'd like to follow this up, that's the place to go to do it. And what is very nice done there is that the New York Times takes the top 50 corporations in the Standard & Poor 500. The Standard & Poor 500 is a index maintained of the major corporations Here in the United States, though, the top 50 in the standard and poor top 500, those are some of the biggest names. And you know, Boeing, Verizon, Amazon, Alphabet, Apple, IBM, Coca Cola, you get the idea. And the New York Times looks at the top 50 and it asks itself the question and uses the statistics of standard and poor to work it out. What's the proportion of the profit earned by these giant companies that they pay out in taxes? Taxes to the federal government, taxes to state governments, taxes to local governments here in the United States, taxes and adding into it taxes to foreign governments, when that's applicable to what they do. So let's compare then what they actually pay to all levels of government with the 35% rate that is in the United States levied just by the federal government. Let me make sure this is clear. Corporations have to pay 35%, that's the legal rate, on their profits to Uncle Sam. But they also have to pay taxes on their profits to the state governments in the states where they're active, to the local governments. Let me give you an example. If McDonald's makes X dollars of profit, they have to pay a portion of that in tax to Uncle Sam. But they also have to pay a property tax in the little village where the McDonald's hamburger stand is, because property is taxed in most cities and towns in America. And if McDonald's sits on a piece of land that they own, they will have to pay a property tax on that land and on that building. All corporations therefore pay taxes to the federal government, the state government and the local government according to what they have where. So the federal government wants them to pay 35%. And I've already told you that the effective rate they pay to the government is less. But it turns out that big corporations are so good at cutting their tax bills that even when you add the state, the federal, the local and the foreign taxes they pay. I'm going to give you a list of corporations and tell you what they actually pay to all levels of government and compare that in your mind to the 35% nominal rate on paper they're supposed to pay to the federal government. I'll start with the one I found stunning. Boeing Aircraft, the major producer of jet engine jet aircraft in the United States. The total percentage of its profits that it pays to federal, state, local and foreign is 7.8%. That means that they have reduced their federal probably down to next to nothing. And my guess is they've done that with their state and local and foreign taxes as well. That's why all taxes together that they actually pay is 7.8%, even though nominally, legally they, they are in the 35% to Uncle Sam alone bracket, but not really because of all the exemptions and deductions they take. I'm going to give you the other numbers, but keep in mind these are what they actually paid to all governments versus the 35% that keep hearing about in the press as if anybody paid it. Verizon 12.5% Amazon 12.5% Alphabet, that's the former Google 16% IBM 17% Bristol Myers Squibb 18% AT&T 19% Berkshire Hathaway, that's Warren Buffett's firm 20% bank of America 23% PepsiCo 24% Merck 28% Walt Disney 31%. In other words, the major corporations in the United States, the big ones, the ones that dominate and control this economy, don't pay anything remotely like what you hear about in the newspapers. They don't pay the 35% rate to the federal government. They don't pay 35% to everybody combined. That's how little they pay. When you hear from corporations complaints about their tax bill, you're listening to people that are counting on your not knowing what the reality is. And the least I can do is try to do something about that. Next. The Trudeau government in Canada is about to do something or has announced it is going to do something that is extremely dangerous, economically speaking. And I want to talk about it because it's a marker not only for which direction Canada is going toward under the liberal so called leadership of Mr. Trudeau, but it is also something that we're going to see in the United States and you're going to see in many other countries. Many other countries have failed over the years, like Canada and like the United States, to raise the taxes needed to maintain the infrastructure, the roads, the bridges, the tunnels, the seaports, the harbors, all of that stuff that is absolutely crucial to how an economy works, to how profitable it can be, to how successful it can be in raising the productivity of its workers, their incomes, the prosperity level. You have to move things around. You have to have the facilities that enable production and circulation of goods and services to happen. And if you don't take care of it, the that'll come back and undo your economic situation. But of course, in order for the cities and towns and governments to maintain the infrastructure that they are held responsible for, they would have to have the resources to do it. They would have to raise the money either by taxing the population or by borrowing the money. And after all, if you tax the money well, then you get it and you spend it and you maintain your infrastructure. Politicians don't like to tax, it makes people upset to pay the taxes. And politicians have chosen most of the time the much easier route of borrowing the money instead, because then they don't have to raise the taxes and they can still do at least the minimum. But that after a while doesn't work out real well because when you borrow you have to pay not only the amount of money that it costs to maintain the infrastructure, but you've got to pay more because there's interest on the borrowed money that you have to pay to the lenders. So it ends up being more costly to take care of infrastructure when you borrow to do it than it would have been when you tax to do it. It gets doubly ugly. The economics here, when you realize that the wealthy folks who lend the money to to the government only have that money to lend to the government for infrastructure because that government didn't tax them, which would have been the other way to get that money. Of course it would have been better for the government to tax them because then all the taxes would be used for the infrastructure that they raised and there'd be no interest charge on top of it. When they choose instead to borrow, they not only save the rich from the taxes they might have had to pay, but give them a reward in the form of interest on lending the money that otherwise would have been taxed away from them. That ought to be a scandal, but it is stunning how many people don't even understand it. Well, now you do. And you might have expected that governments now faced with the need to upgrade the long delayed infrastructure because the politicians didn't want to tax particularly the rich and can't borrow anymore because they're already now having enormous interest costs on the borrowings they've done in the past. What can they do now? Still unwilling to tax the rich because it's too politically dangerous, now not willing to borrow either because that will be an interest cost on top of whatever already is more than the people can stand, the mass of people because their incomes are already too pinched, and the rich because they don't want to pay taxes and they're used to getting away with it. So what happens? A new plan. And Mr. Trudeau's government in Canada is leading the way. New infrastructure programs, upgrading roads, building bridges, repairing harbor facilities, whatever it is, will now be done and get ready folks, by a public private partnership here's how it's going to the government is going to partner with private investors. That's right. The bridge you go over on your commute at home will soon be a bridge that is partly owned by private investors. So will be the road on which you're driving. So will be the harbor that you may be using. Get the picture? Now, of course, the investors are again the rich people who you didn't tax to maintain the infrastructure from whom you used to borrow to maintain the infrastructure infrastructure. Now you're not going to tax them and you're not going to borrow. You're going to allow them to invest, to become investors in part owners of the public facilities. And guess what? They're not going to invest unless they get a good return. Otherwise they'll put their money somewhere else. This is privatization in a whole new form. The general transformation of the public facilities into privately owned and privately profitable. How is the profit going to be made by the investors? Will we see a return of toll roads to use the highway? We're going to have to pay more money, not just to maintain the highway, but to pay off the investors who provided the money to to upgrade that highway. We're coming to the end of what capitalism can figure out as to how to maintain itself without taxing the rich, without interfering in the rich becoming richer and the rest of us squeezed and squeezed. This new plan to finance infrastructure by making it a paying investment proposition for for the rich. Their profits will come out of our payments for an infrastructure that could otherwise be the way it once a public service paid for by a just tax system that taxes people according to their ability to pay. The rich don't want to and have the political clout to work it out this way instead. The next update has to do with a side effect that I want to put in your minds of the anti immigration rhetoric that Mr. Trump rode into power in the election earlier this month. You may not have thought about this and that's one of the reasons why I want to bring it to your attention. It became clear to me in my position as a professor when over the last two weeks or so, since the reality of the election result has sunk in and I have been approached by a remarkable number of foreign students. For those of you that are not aware of it, the proportion of foreign students attending American universities is probably higher today than it has ever been for many Americans over the last 20 years, the cost of higher education, particularly graduate education, that is education beyond the bachelor's degree, has become too expensive. And the job prospects once you get a master's or a PhD degree too questionable to justify borrowing the money to get an advanced degree. As a result, many, many graduate departments around the country, that is Post BA programs, only survive to the extent that foreign students, students from other countries come and pay to enroll and get these degrees, degrees which are often very valuable to them back in their home, from which they come because a degree from an American university is respected there. So they don't have the kind of job prospect difficulties that American young people do. And so we have seen a shrinkage in the number of American students and a growing number of, of foreign students. What they're telling me is they are reacting to the election and particularly to the anti immigration thrust of Mr. Trump's campaigns, and they are reevaluating whether they're going to stay in the United States, whether it is safe for them to plan to get married, to have children, to search for a career. All of those things which they had thought to do here, where they've been educated, where they have often lived for quite many years and adapted, found romantic partners among Americans, etc. Etc. They're leaving. That's the blunt bottom line that I want to drive home. They are leaving. And that means the United States will have done something very interesting, spent quite a bit of resources training and educating creative, productive young people. But instead of reaping the benefit of what they've learned to do, instead of getting the productivity that they can bring to jobs all across the United States, we're driving them out. We are making that productivity serve the economies of, from which they came. By the way, good news for those economies, but not good news for the United States. That's a cost of this kind of behavior, even just the discussion of it, let alone the implementation, if indeed that materializes. But we're talking serious effects. Let me take it a step further. Many graduate programs in our universities will collapse. That is, they'll stop functioning. Because if you don't have a steady flow of foreign students, you can't sustain the salaries of the professors assigned to teach them, the personnel that have to service a graduate program, and so on. You're going to see if this continues a major shrinkage in the advanced educational structure of postgraduate education in the United States. And that has all kinds of costs as well. It'll mean that more and more colleges and universities will not be able to sustain graduate faculty who often do a disproportionate amount of the research that goes on in universities. More and more of our teaching institutions will be exclusively teaching institutions, whatever research they once did, no longer sustainable because neither American nor foreign students are coming in to provide the money, the classroom audience, et cetera, that a graduate program needs. Has anyone calculated the costs to the United States of the research that won't be done, the costs to the United States of these trained young people now leaving the United States having gotten an education here, but delivering the fruits of that somewhere else? The answer is no. Campaign rhetoric being what it is, the nature of the mass media following campaign rhetoric being what it is, the real issues, the real costs of these arguments and these claims and these promises awaits those of us who start looking seriously at these situations. Doesn't take rocket science to ask these questions, but it is the politically difficult thing to do for most of the media and of the academic world too, even though it is most directly threatened by all of this. The last economic update we have time for today in this first half of the program is a response to several of you sending me requests to talk a little bit about the business of real estate, stimulated, of course, by the fact that, you know that Donald Trump comes from the real estate industry. So I want to talk about real estate economics a little bit. Well, first, real estate. What do we mean? Well, we mean, first and foremost, the land. Real estate is about land, and it's likewise about what's built on the land, an apartment building, a factory, a store, a mall, whatever it is. Real estate is about land and property on the land and the business of that. A real estate investor, a real estate business is then mostly about the land and the buildings on the land. Mr. Trump is not a builder in the sense that he operates a construction company. That's a different kind of industry, usually called construction, the ones who actually make the buildings. That's not Mr. Trump's business. He's in real estate. That means he owns land and he owns buildings that other people built. He may have purchased those buildings after they were built by somebody, or he may have arranged to pay the construction company, excuse me, to make the building. But real estate is about owning land and buildings. It's clear, I believe I don't have to explain it to you, that the person who owns the land didn't produce it. Nobody did. The land is there if you're a religious person, because God put it there, or if you're not. The land is there because of the evolution of the solar system and the planets. And here we are, and we've got land, we've got surface of the earth. And likewise, the owner of the building Very rarely himself or herself built it. Yes, there are people who build their own homes. I've admired that. But there are not many. The vast majority of people who own buildings didn't build them. Which means that a real estate dealer like Mr. Trump produced neither the land nor the buildings that he owns. That is, he produced, to be blunt, nothing. He's an owner. And how does he earn his money? By allowing other people to use what he owns for a period of time and to pay him for doing so, he rents out the land. He leases or rents the buildings. That's what he does. And his income depends on whether people want that land or not and whether people want use of that building or not. He depends on whether society moves in a direction that people come to where he owns the land, then the value of that will go up. If people want to use whatever buildings he has, then the value of the rents and leases go up. He's dependent upon what society does for all of his income. If people leave the area, he has no income. If people don't want his particular building, he has nothing. He depends on society. He produces nothing. He earns because of how society develops. That is the economics of real estate, and that's what produced Mr. Trump. We've come to the end of the first half of economic Update for this Thanksgiving weekend. Please stay with us. We will be back right away with a number of major discussions of issues of enormous importance in the world today that we will have time to give the analysis that they need and much too infrequently obtain. Stay with us. We'll be.
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Right back. I ain't gonna work on Maggie's farm no more I ain't gonna work on Maggie's farm no more well, I wake up in the morning hold my hands and pray for rain I got a head full of ideas that are driving me insane It's a shame the way she makes me scrub.
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The.
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Floor I ain't gonna work on Maggie's farm no more. I ain't gonna work for Maggie's brother no more I ain't gonna work for Maggie's brother no more well, he hands you a nickel he hands you a dime he asks you with a grin if you're having a good time and he finds you every time you slam the door I ain't gonna work for Maggie's brother no, I ain't gonna work for Maggie Paul no more I ain't gonna work for Maggie Parr no more when he puts his cigar out in your face just for kicks his bedroom window it is made out of bricks the national God stands around the door I ain't going to work for Maggie Pa no more. I go to work for Maggie's more no more I ain't gonna work for Maggie Ma.
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No more. Welcome back, friends, to the second half of Economic Update. For today, I want to talk about issues that you have asked me to discuss and that I find very compelling as objects for our work in preparing the segments for this program. Before I launch into them, I want to remind you, however, that this is a partnership, this program between us at Democracy at Work and all of you that are watching or listening to this program. We do this work in order not just to inform you, but we hope through you to inform all kinds of other people. People we don't know, but you do. Your friends, your co workers, your family, whoever. Please make use of what we do here in your conversations, Share portions of this program or all of it. Please remember, every one of these programs is archived at democracyatwork.info, our website. You can get all of them as far back as you want. Take part of them. Take all of them. It's at your discretion. There is absolutely no charge. The website is available to you 24 7. We have a second website, rdwolff, with 2f's.com. much of the material is there, too. There's an enormous array of material there. Make use of it. Be a partner with us. Share what we do. The websites allow you to follow us on Facebook and. And Twitter and Instagram allow you to communicate with us about what you like and don't like. Allow you to arrange with us. If you have a radio station that might be interested in carrying this program. We're very eager to go beyond the 71 stations. We are proud to say carry this program every week as it is. But we want to grow. If you know of any radio station, let us know. Connect us to the people. We will follow up. And the same is true. If you would like to bring me out to the area where you are so that I could meet you and meet the people that are interested, build this sort of thing. We are developing Democracy at Work action groups around the country. Please let us know if you might be interested in forming one and getting involved in one. And these are people who try to actualize, to be active in their community, to begin to make the changes that this program teaches all of us about as we go about constructing it. So partner with us. That's why we're here. Okay? Interest rates. Let's talk a Little bit about interest rates. Why? Well, next month in December, it is widely expected now, barring some surprising events, that the Federal Reserve will raise interest rates for the first time in quite a while. It's been eagerly debated and anticipated. And it looks like finally, now the election being over, so it can't be viewed as some ploy of one or another candidate. It looks like the folks working with Janet Yellen at the Federal Reserve will raise interest rates. Let's talk about why that's done, and let's talk a little bit about when the reality of it all might sink in. First, the why it's done. Well, that's kind of easy. Over the last eight years, in the wake of the crisis of 2008, one of the ways that the government of the United States has tried to restore a broken, crashed capitalist economic system has been by taking unprecedented monetary steps. Basically, what they did is bring down interest rates to nearly zero. All of you have encountered that in your own lives, one way or another. And along with that, and indeed as part of it, they have pumped up the money supply. They have increased the amount of money vastly in this country. Okay, the idea was if interest rates are lower, it will encourage individuals to borrow more and buy more things, and it will encourage corporations to borrow more and to hopefully expand production producing the things that borrowing people will buy more of. That was the hope. It didn't work. That is, the growth it stimulated was anemic. Too little, too late. Turned out that people were borrowed up to here and they weren't going to borrow that much more, even if the interest rates were low. And ditto for the corporations. They'd gotten burnt by borrowing too much. They were hesitant even at incredibly low interest rates. Plus, what would they borrow for? To increase production when people weren't buying more, when we still had big unemployment, when the people who got jobs got them at much lower income than they used to earn and therefore couldn't buy. You see the picture. It didn't work real well, but it did leave the economy with a great deal more money floating around than there had been before. If you have a situation where there's a great deal more money, then there are increases in goods, then there is an economic risk. This is a risk peculiar to this kind of economy to keep the system from collapsing altogether. After 2008, we pumped the economy full of money. We solved the problem, in a sense. We got the banks recapitalized. We got them going again. They were basically bankrupt in the last four months of 2008. We got them Going again. And we got the economy chugging along, not very well, not the way it once did, not adequately, but we got it over the worst. But we paid a price, namely an economy with way more money suddenly over a few years than there are more goods. So there's a risk. It worried a lot of people. Here's the risk that money, there's so much extra of, could start looking to buy the goods and services that there aren't extra of. And what that will do is lead to a bidding war. All the people, all the companies with all the extra money are going to be competing to buy the land, the buildings, the materials, the gold, whatever it is they focus on. And that's going to create. Here comes the keyword inflation, a rising price level. Now, we haven't been too worried about it, because those who did worry didn't see one, didn't see it in 2009 when we were already pumping up the money supply, didn't see it in 2011 or 13. We just didn't see it. So people got complacent, people got relaxed. Ooh. Inflation isn't seeming going to happen. The economy pumps up the money supply, but people just hold the money. They don't in fact spend it. Wow. But here's the problem. They might, they might, they might decide at any moment, the people with the money, the companies with all the extra money that they sit on, they might decide that it's wiser to buy something real as a way to hold your wealth, rather than to hold the money as a way to hold your wealth. And why might they think that? Well, it's kind of the peculiarity of how a capitalist market works. Everyone who has money, lots of it, that may exclude a good number of us, but those who have a lot of money, companies or individuals, are always worried about what will happen to it if there's an inflation. They all learn, if they haven't understood it already, if there's an inflation, having money is bad news because as the prices of everything rise, the value of your money falls, right? Because whatever money you have can buy fewer and fewer things if the prices of things go up. So an inflation, if it materializes, is dangerous for people who have money. The minute they think an inflation is coming, the people with money decide quickly to get rid of the money and buy something that will go up in price to avoid losing the value they would lose if they hold their money. So think of the irony to defend themselves against an inflation. People with money rush in to buy things, thereby producing the very inflation that they fear. We call that in economics a self fulfilling prophecy. The prophecy of an inflation becomes the very inflation it fearfully prophesizes. That's always a danger in an economy like ours. That solves the collapse of 2008 by pumping up the money supply. Whenever you have a downturn, whenever governments respond by pumping up the money supply. And remember, capitalism has downturns every four to seven years. So it's pumping up the money supply periodically too. There's always this risk which worries people that an inflation will ensue. But it's even more than just that risk. Think of it this way. The crash of 2008 that unemployed so many people, that create such suffering around the world to this day, that made millions lose their homes in the United States. And on and on and on. That crash was not foreseen by the United States government. It was not planned on by the Federal Reserve. Armies of economists missed the signals, failed to be alerted, took no steps to prepare for, could not prevent, and could not get us out of for years this disaster. Knowing that recent history, why in the world should we believe that if an inflation comes upon us, the Federal Reserve and the United States government are going to suddenly know how to act, when to act, where to act, to make sure it doesn't spill out of control. That's just what it showed us it couldn't do with the downturn of 2008. And I'm here to tell you there is no reason to assume that they can manage it all brilliantly if an inflation unfolds. So they're scared. And what they're likely to do in December is raise interest rates, because that's a way of slowing the economy down. It's a way of saying we can stop the inflation that we're afraid is maybe coming by making it more expensive for people to borrow money so they won't be borrowing a lot of it and rushing in to buy things. And that will tamp down, that will slow down the inflation. Inflation. That's what we're going to do. And now I have to be the bearer of the bad news. The capitalism that crashed in 2008 and that forced the increase in the money supply is now going to react to the inflationary danger of an enhanced money supply by raising interest rates. But the problem is when you raise interest rates, there are side effects. And just as in medicine, the side effect can be more dangerous than the illness you're trying to deal with. So it is in economics, particularly in a capitalist system with all of its contradictions, because if you raise the interest rates the way everyone now expects the Federal Reserve to do in its mid December meeting, you're going to make all kinds of things more expensive for Americans. That's the whole idea. It's to be less spending because it's more expensive to borrow and that will slow down the inflation. But it'll be less spending on homes. Why? Because most Americans buy their homes by taking out a mortgage loan. And how much your monthly payment is for your mortgage depends on the interest rate. If you raise the interest rate, the monthly payment of a mortgage for the same price house will go up. Ditto the cost of your monthly payment for your car. Most Americans buy their automobiles or trucks that way so that the cost of your automobile will go up, the cost of your housing will go up, the cost of your credit card balance will go up because the insure the interest rate part will be higher. And for students, the cost of the student loans will be higher. This is going to have economic effects that are large, that could ramify, that are going to slow down an economy that's still not out of the doldrums it got into after 2008. So the very thing they're going to try to do to deal with an inflation could very badly hurt the jobs, the incomes and the economic situations of masses of people. And yet they don't know how to do otherwise. It's the sign of an economic system that isn't working real well that everything it does leads to a problem the solution for which creates yet the next problem. That's capitalism. And the problems I just went over, they are the problems of a capitalism that's in deep trouble. We live in it. But there is no excuse to pretend, unless you are selling something, that those problems don't exist. And there's no excuse for not facing up to them, especially once the campaign is over and the fakery of all of that is behind us. The next major discussion involves me asking you to imagine something with me. But it's not a pure exercise in imagination because it comes right out of our current situation. We have two political parties that dominate in the United States, Republicans and the Democrats. And while we can talk about the differences they have, and we did that earlier in the program, I want also to talk about, as I have stressed last week in this, how much they have in common, how much they're not really two parties, they're two wings of one party. Let me explain. Both parties are enthusiastic boosters for capitalism, hardly surprising given the history of the United States. They disagree on how best to foster, to stimulate capitalism, how best to be supportive. The conservative Republicans tend to believe, let the government intervene minimally. Let the government regulate minimally. Let the system go. Be privately driven. And the Democratic liberal types, they want the government to come in and fix it, make it work better, Smooth out the rough edges, Help the people that are left out to make it work better. But they're both enthusiastic supporters of corporate America, of employers and employees. That's the kind of economic system they take for granted. That's the kind of economic system they think is the best in the world. That's the kind of economic system they support. That's why they're going to lower the corporate tax rate, as we discussed it, because that'll help corporations and they believe that will help the economy as a whole. They love capitalism. They support capitalist enterprises and they subsidize those enterprises. They help them by lowering the taxes, by building the roads and highways where they need them, by setting up the public schools to educate the people they will employ so that they are more productive as employees. Government builds capitalism, and it has from the beginning of the United States as a nation. You all know that. But now let me ask you to imagine something. Imagine a world. Maybe we're already in it, but imagine with me a world where there were two alternative economic systems available to us, around us. One was the one we recognize, capitalist corporations, businesses that have shareholders at the top, shareholders who elect a board of directors that makes all the decisions. And then the board of directors hires the managers who hire all of us to be the employees. All the decisions are made by the board of directors and the major shareholders who elect them. We've been through that many times on this program. That's the capitalist sector of the economy. Many businesses, many industries, manufacturing, services, are organized that way. But now, in your imagination, imagine that we wanted, as a nation, we wanted to have, alongside this capitalist sector of the economy, a worker co op sector. A sector organized in a different way, without major shareholders, without a board of directors elected by major shareholders. Instead, businesses, factories, offices, stores, organized in such a way that all the workers who come to that workplace, who participate in making the hamburger or the software program or the music concert or whatever it is, work in a democratic environment. One worker, one vote. And they make all the decisions collectively, democratically, that we operate our workplaces the way we operate our political decisions, where we live with democratic voting, one person, one vote, etc, etc, something like that. We had a worker co op sector. And why would we do that? Because we wanted to give Our people freedom of choice. We wanted the American people, our people, to be able to see, to inspect, to experience both working in a top down hierarchical capitalist enterprise and a democratic worker co op enterprise. To have the choice of where to work in your lifetime. To have the choice of from whom to buy product or a service. If you'd like your dollar expenditure to be a vote for the capitalist system, you buy from them. But if you would rather have it be a vote for the cooperative system, you buy from them. Rather like today, some Americans make a point of buying fair traded coffee, sometimes paying a few cents more per pound of the coffee for the comfort, for the satisfaction of knowing that the conditions, the people growing and processing the coffee are better when you buy that one than if you buy that one. As long as you believe that. Let's suppose we wanted to give the American people freedom of choice to have two sectors of the economy. Capitalist sector, worker co. Op. Let them compete, let them do their thing. Let all of us as Americans decide freely, each of us where we want to work and where we want to shop. And let's see how it works. Well, if you're with me in this imaginary arrangement, which is already kind of happening, then there's a political implication I want you to think about as we close today's show. We have in the United States two political parties that have throughout their history supported, encouraged, stimulated, saved and done everything you can imagine for the prosperity of the capitalist system. What we don't, by the way, that's the Republicans and that's the Democrats. They only differ on how best to do that. But they don't differ on what they should be doing. What we don't have, not yet is a political party that says, okay, we are different. We want there to be a bigger, more successful co op sector. We're Americans too. We support the nation. But we think the future of the United States will be better served by a bigger, more available worker co op sector. And we are going to be the political party of that. We are going to press that the government should be as supportive to the co op sector from now on as it has always been to the capitalist sector. To operate perhaps as a kind of neutral referee, allowing the capitalist sector to do its thing and the worker co op sector to develop in its own way and let the people decide. But no discrimination in the sense that the government is not going to tilt to one or the other and that the new political party, in one way it's a third party, but if you think about it, it's really only the second party, because Republicans and Democrats agree that capitalism is what they're for. So the other party would say, well, we are the advocates, we are the political expression, we are the political movement that supports worker co ops as an alternative way to organize an economic system. Well, how about putting our money where our mouths so often are? If we believe in competition, let these two compete. If we believe in a government that is fair to the competitors and doesn't tilt towards one or the other, then let's quickly empower a political party that can make sure that the government is as fair to the worker co op sector as and as supportive as it has been exclusively to the capitalist sector. Let the struggle begin so that the two sectors, each with a political spokes machine, can appeal to the mass of people to make the decision in a democratic what balance between these two do you want? What do you think will be best for the economy as a whole? That's a crucial question and it's a question that's now on the agenda for the world, which is why this is more than an imaginary experiment. This is actually a way of thinking out how the growing movement for worker co ops is going to become a political as well as economic issue, a part of the governance, the structure of American society as it is around the world. Let me conclude with one example of how this is happening in Britain. There are also two major parties. They're not called Republican and Democrat, they're Conservative. In labor, the Labour Party and in particular its leader Jeremy Corbyn and John McDonnell have committed themselves to building a worker co op segment or sector of the British economy. In other words, the imaginary exercise I just did is already a reality in the thinking and planning of one of the two major parties in Great Britain. The commitment of the Labour Party is if they win the election, they will pass a law that requires every existing capitalist business can continue any way it likes. But if it decides either to close or to sell itself to another business, or to leave the country or to go public by issuing shares, before it can do that, it has to give its own workers the right of first refusal. That means the workers will be given the right to buy the company to convert it into a worker co. Op. If the workers don't want to do it, the company is free to do whatever it wants. But it has to do that first and the government will provide some of the money needed by workers to do this. This is a commitment to build a worker co op sector and an implicit commitment that the Labour Party will become the party that advocates for them. So it isn't so imaginary after all, is it? We've come to the end of this program. I want to thank, as always, truthout.org, that remarkable independent source of news and analysis. They are a good partner for us, have been for a long time. They're what we urge all of you to become, each in your own way. It's a pleasure producing this program. It's a source of immense satisfaction to me. And so I look forward to doing it again next week. Change, change, change. Things gonna change. Yep, it.