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Saint gonna change. Welcome friends, to another edition of Economic Update weekly program devoted to the jobs, the incomes, the debts, the present, the future, all in terms of our economic well being and our economic problems. I'm your host, Richard Wolff. I've been a professor of economics all my adult life and currently I teach at the New School University and New York City. Before jumping into the Update program for today, and a little bit later introducing to you our guest who will be interviewed in the second part of the program, I wanted to mention some upcoming trips that I'm taking and if you're in those areas, to urge you to check our websites to find out the specifics. I'll be going to Kansas City, Tampa, Houston, Ames, Iowa, Fresno, California, Seattle, Washington, Berkeley, California, Farmingdale on Long island, and probably several other places I have not remembered. But if you're in any of those, check rdwolff with two Fs com or democracy at work, all one word, democracyatwork.info and you can get the particulars. Second, I want to thank the many of you that have sent in very valuable leads to radio stations that we now are working with to get this program on even more stations. We're over 45 now. More stations, as many as possible. And your connections, your friends, your knowledge, your suggestions have been very, very valuable in finding new outlets for this program. Thank you and please keep up the good work. And finally, if you go to that website, democracyatwork.info Please sign up for our newsletter. Like everything else, it's free, it's available to you all the time, and you will be getting regular updates about a whole host of things that we're doing that I think you will find interesting. So let's jump right in. This is an important weekend in American history. It's the anniversary of what we've come to call 9 11, a horrific moment years ago when airplanes crashed into the World Trade center in New York City, expressing rage, anger and frustration of people affected by world politics, mostly in the Middle and Far east, and holding the United States obviously responsible because of that act committed here. And it's on our minds, not only because it's the anniversary, but because in a peculiar way, it's being played out again. In the last few weeks, all of you have seen or heard stories about the horrible refugee crisis now crashing in on Europe. Roughly 10 million people have been displaced, chiefly in the Middle east, in places like Iraq, Syria, Libya. And their conditions have deteriorated in some cases. Now for as far back as 9 11's events, conditions of life have become unbearable, leading 10 million people to pull up stakes, to leave the countries of their birth where all their families reside, where they know the language, where they had a job, and to go in a very dangerous way, a very long distance to a country whose language they do not know, whose customs they have never heard about, under conditions they cannot foresee or imagine. This is a trauma in every conceivable dimension of the term. And what's driving these refugees is not different from what drove those people who did that awful act back on 9 11. These were people coming from places where poverty and deprivation had existed for a long time, making people very upset. These are folks who came in 9 11, like the refugees today, running away from war and conflict that made the problems of poverty even worse. It's like an object lesson that if you have an economic system that develops extreme wealth in a few places and the opposite, extreme deprivation and poverty in another, you're going to get angry, bitter, resentful people able to damage innocent folks without thinking about it and desperate enough to undertake becoming a refugee in the middle of their lives. It's a problem of economics not only, but in good part. And we ought to reflect on these twin disasters because they have so much in common as to what brought them about. The second update for today is a peculiar one. I want to take off my hat to the French, but perhaps in a way they won't be happy with. I caught a story about the Ford Motor Company. Well, what, you might wonder, does the Ford Motor Company have to do with France? Well, Fords don't sell well in France. They do much better in Britain and Germany. But. But they really have not been able to get the French people to buy a Ford, no matter what they've tried to do. So they decided to buy politicians, something large corporations make a specialty of anyway, because it solves a whole bunch of their problems. Well, apparently they decided even better than a top politician is a top politician's visible wife. And so it was that in France this last week, Carla Bruni Sarkozy became a spokesperson for the Ford Motor Company, trying to get fellow French citizens to buy Fords, which they haven't been doing. Who says politicians aren't for sale? Next item, Los Angeles. Los Angeles has something called the Los Angeles Homeless Services Authority. And whatever they do for or to the homeless, I'm not exactly sure, but I do know they keep good statistics. And that is not done in many, many cases across the United States. So that much of what is said about homeless people and homelessness Is, let's be kind, conjecture, guess, estimate, but not very reliable. But in Los Angeles, they do a good job. And the Los Angeles Weekly this last week reported that over the last nine years. Get ready for this, because it blew my mind. 942,000 people became homeless in Los Angeles. That's just shy of a million people. The overwhelming bulk of them were people already on public assistance. So what this means is even if you qualify for public assistance in this country, it's so meager, it's so inadequate that you will likely be homeless for part of the year or maybe even for several years. The LA Weekly referred to this as an epidemic of homelessness in Los Angeles. And for me, it was another sign that when I hear about recovery, it again underscores it's only recovery. If you look at the numbers that suggest that if you're willing to look at all the other numbers that are relevant, no recovery. The line of homelessness in LA reported this last week as a line that goes up since 2007 and it doesn't go down. It's getting worse, not better. Well, last week was Labor Day, and a couple of you chided me for not saying more about Labor Day. So let me do that. And I thought a little history, we don't do enough of that on this program, might be useful. Where does Labor Day come from and what is it that we can say about it? Well, the history of Labor Day is roughly the following. And I want to thank the United States Green Party for having put out literature that reminded me of this history and enabled me to compile this segment. Back in 1894, the workers who produced the Pullman train carspullman was very, very important as a producer of rail cars. Train cars were suffering layoffs. And in those days, what was often the case, workers who had factory jobs lived in housing provided by the employer. So the employer paid them a wage on the one hand, but then charged them rental on the housing on the other on the other. And Mr. Pullman, who owned and operated the Pullman company, came up with a novel way of improving his profitability. He laid off the workers producing the cars he couldn't sell, but did not relieve them of the rental that he demanded from them, putting the workers in an impossible situation. They weren't earning any money because Pullman wouldn't pay them, and therefore they didn't have the rent that Pullman insisted they pay. Led by Eugene Victor Debs, an important fellow in American history, they went on strike. The strike was quite successful. It called on workers all over the United States to boycott, not to take a train that had a Pullman car on it. At its peak, this strike in 1894 involved 250,000 workers in 27 states. Riots broke out as starving workers faced off with the police. Pullman involved a private security force, people later known as Pinkertons and nowadays known as Blackwater. And it got so tense that the president of the United States at the time, Grover Cleveland, called out the army and the marshals, and they killed 30 people in crushing the strike. But even though the strike was defeated, everybody who paid even a little bit of attention knew that disrespect and hostility towards working people was not tolerated by millions of Americans. And that something had to be done, at least symbolically, to recognize labor, since what was actually done to labor was as terrible as what I've just said. So there began to be a movement to have a day devoted to labor. It's a little bit like how, having eliminated the Native Americans, we name so many states and cities after the people that we eliminated. There's some guilt in there, isn't there? Anyway, the idea came, let's have a Labor Day, a day to honor labor. Kind of a strange idea given what you've just done. But that's the way guilty people function. So we had a conversation, but here was the problem. Workers around the world had already begun celebrating a Labor Day every May 1st. And that was in honor of a strike and of an action for the eight hour day in Chicago, in Haymarket Square in Chicago. And so it wasn't possible for the people who wanted to have an honor Labor Day to inadvertently join in the May 1 designation the way they did in other countries, because that honored striking workers and that condemned the police brutality against those workers in Chicago and the hanging of several people on very dubious evidence that in Chicago, end result, we would have a Labor Day to honor what had happened in the Pullman strike, but we wouldn't make it on May 1st. The way labor is celebrated everywhere else in the world. We'd make it on the first week of September. And that's the story of Labor Day. And it might make you think a little bit about what's at stake here. Okay, moving right along, I want to tell you all about a transaction that's almost done in which an American millionaire is dealing with a Russian billionaire because the two of them have made a decision that they can make more money by cutting this deal, and we in the United States will be affected by it. But of course, in the nature of capitalism, the millionaires and the billionaires make the deals. We read about it in the newspaper and try to figure out what it might mean in our lives. Having any democratic input in the decisions is of course, not how capitalism works. In this case, it's a brand new sports arena right in the middle of New York City called the Barclays Center. And it's also about a very famous basketball team, the Nets, who play in the Barclays Center. Turns out they are owned, that is the Barclays center and the Nets, by a duo. Two. One is an American millionaire, Bruce Ratner, who develops real estate in New York City and has for a long time. And the other one is a somewhat murky Russian billionaire named Mikhail Prokhorov. And the news is, for those of you that are glued to the radio as we speak or to the television, that Mr. Ratner is going to be selling his share to Mr. Prokhoroff. So when you go to the Barclays center, if you do, and when you look at the Nets, if you do, you. You're going to be watching what two millionaire billionaires have decided to do. Your job is to take it, to look at it, and to forget about the fact that we allow something like that to happen so that two individuals can make a decision that all of us have to live with, which will go in directions no one can foresee. Next, I want to congratulate the teachers in Seattle, Washington, yesterday, at the time this program is being made, on September 9th, they went on strike. 53,000 students in the Seattle area had to postpone the beginning of the school year because the teachers are on strike. They haven't gotten a cost of living increase in six years. If you realize that the prices of everything they had to pay for went up each of those years, 1, 2, 3%. If you don't get any wage increase and the prices you have to pay go up 1, 2, 3% a year, and this goes on for six years. You do the math. It means the value of what you're being paid, what you can actually buy with your income has gone down about 15% at least in those six years. So you've been dishing out cuts. The funding of education in the state of Washington is so bad that the Supreme Court of the state has fined the state of Washington for underfunding public education. They're so determined not to tax corporations and the rich that they're sacrificing the education of their children. And there's beginning to be a fight back, and in this case, it's led by the teachers union that is making that part of the issue that they're organizing a strike about. And Washington deserves another congratulations. The Supreme Court of Washington handed down a ruling recently 6 to 3, that charter schools are unconstitutional. Here was the reasoning as explained by the Chief Justice. The law in Washington stipulates that if you form your own charter school that's effectively a private school organized by an institution or parents or whoever puts it together, you're entitled to get funding. In other words, as it was interpreted, the public money, city money, state money, county money has to be provided to a private school. So people complained, the union complained, and all kinds of other associations complained. Wait a minute. How can you give public money to a school that isn't accountable to the public? It's paying for it. A charter school has its own leadership, a private leadership. Private decisions are made as to who to accept in a school and what to do in the school. That's fine if you want to do it, but no public money should go to a private school. That was the argument and that was the argument with which the Supreme Court agreed. So there are no charter schools, at least for the time being. It will be appealed. Finally, news from Japan. And this is an important thing because we're going to be talking about that in the interview that we're going to be doing later in Japan. As back in 1984, 85% of Japanese workers had secure jobsjobs where they knew what days they were working, what hours they were working, how much they would get paid, what exactly the benefits were, and their jobs were secure for Life. Today, today, 37%, over a third of Japanese workers have no such security. They've lost it. It's been taken away. In the words of an article that appeared in the Bloomberg Financial News Service and I as economic growth stalled in Japan, companies became less willing to hire full time workers, turning instead to part timers who are easier to lay off and often receive less pay and fewer benefits. Moving jobs from secure to precarious is a major assault on working people happening in the United States, Europe and as you can see, in Japan. And we're going to have occasion to come back and look at that some more in the time that remains in this first half of our program. I want to respond to your questions as we always do, and here's one that several of you sent in that I think very much deserves an answer. The question is $15 an hour as a minimum wage is sweeping the country, at least as far as fast food and retail workers are concerned. What about the Argument. The questions say, what about the argument put forward by the owners and operators of fast food restaurants and big box retail stores and so on, that if the wages go up to $15 an hour, well, then all the prices will go up and it won't make any difference. They'll cancel each other out. What about that? Okay, let's respond to that. The short answer is when costs go up, prices do not necessarily go up. They never have worked that way. This is an attempt by employers to undercut the support for $15 an hour minimum by suggesting that if that happens, we all are going to face higher prices. Let's see the logic here. When the costs of an employer go up, for example, because he has to pay higher wages to his workers, the employer might like to pass on the higher cost in raising his prices. He might wish to be able to do that. But here are two considerations every employer faces that may make him decide not to do it. And this happens all the time. Number one, let's imagine the fast food industry. And let's imagine that just one of the companies decides not to raise the price. That is, let's pick one Wendy's hamburgers. They decide, we're not going to raise the price. We're going to take a cut to our profits, pay the higher wages, but not raise our prices. You know what will happen if Wendy's does that? McDonald's will have to follow suit and Burger King will have to follow suit. They'll all have to follow suit. Why? Because if they don't, if they raise their prices, they will lose their customers by the droves who will go over to Wendy's. In other words, in economics, if a competitor, just one, chooses not to raise the prices, it'll make it impossible for any of them to raise the prices. But that's not even the most important reason why a wage increase doesn't necessarily lead to a price increase. Here's the more important one. Every business has to worry that if they raise the prices of what they charge for what they produce, that they will lose customers. So what every business has to do, even if it's only an estimate, is to weigh the gain from raising the price against the loss for all those customers who won't buy whatever it is you're selling anymore because you raised the price. If the loss they suffer from customers they lose is bigger than what they gain by raising the price, they don't raise the price. If Americans are paid $15 an hour, it is perfectly possible that either the competitive reason I gave first or the Risk of losing customer reason I gave second. Or the two together will mean that, guess what? The workers will do better by having $15 an hour, and the employers will have to eat the cost in reduced profits. End of story. So when an employer tells you that he or she isn't interested in paying higher wages because they want to protect you from the higher profits, you're being hustled. It's not at all clear that an employer facing higher wages can or will raise prices. And here's a final point just to drive it. If the employer thought that he could raise prices and not worry about a competitor failing to do likewise and not worry about the customers he might lose if he raises prices, he would have already raised them. That's what market economics tells every employer. Put the price as high as you can, make the most profits. They're already doing that. And if you raise their wages, they probably can't do any more of it than they've already done. And so it's an empty argument. It's meant to fool the public into becoming passive or even oppositional to the efforts of working people to get better wages. Okay, folks, we've come to the end of the first half of our program. As usual, I had other questions I wanted to respond to and other updates I had hoped to be able to elaborate. Please stay with me for the second half of this program. I think you will find the interview we do there having to do with precarious work, particularly here in the United States, follows immediately from what we said about Japan and gives a whole new window on the struggle between capital and labor and the importance of that struggle now that capitalism as a system is in such turmoil and and crisis around the world. Stay with us. We'll be right back. Did you stand there all alone?