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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, all of those kinds of dimensions of our lives that affect us, our children, our futures. I'm your host, Richard Wolff. I've been a professor of economics all my adult life. And as always, I hope that that has been a good training to bring you this analysis of the last week or so's major economic events. I want to begin today with talking about two related the release of regular government data about the economy. It is, after all, the United States government that is the major producer and distributor of data about jobs, incomes, interest rates, you name it. And then the media, the major media in this country who record and who announce and who distribute what it is the government says. So in the last week or so, there's been a release, as is typical this time of the year and this time of the month, of data, and the one that got the most attention was an announcement that wages, and here the numbers are important, that wages had gone up, hourly wages between January 2017 and January 2018 by 2.9%. So just under 3%. This got the media into a tizzy, which the government came, clearly wanted and fed. Why? Because wages have been stagnant in the United States for most of the last 35 years. That's right. If you adjust the money we get as wages to the prices we have to pay for what we spend our wages on, we're not getting much more today than we did in the late 1970s. Yes, we have more money in the envelope. But when you pay the higher prices, you're about able to buy the same amount of stuff today that you could then. For most Americans, if you're actually buying more stuff, it's not because your wages went up more than the prices they didn't. It's because you're borrowing more money. And that carries its own dangers. But let's get back to this almost 3% increase in wages over the year. See, a number of commentators said the economy is improving. Well, here we go with a reality check. How did prices go up over the last year while wages were going up 2.9%? The answer is between 2 and 2.1% is the rise in prices. In other words, when you adjust the 2.9% increase in money wages for the 2.1% increase in the prices we pay, you're left with a 0.8% increase in the actual wage per hour we get. And then we have more problems. In January of this year, the average length of the work week shrank so that you have less hours of work. So of course you're not getting paid as much. And compared to a year ago, the percentage of our people that are in the labor force either working or looking for work is lower than it was a year ago. Well, when you put these things together with the normal uncertainty of these numbers, here's the inescapable compound. Wages are stagnant in the United States. They are as stagnant over the last year as they have been for most of the 30 years. The notion that it's different from that is a mistake. I'm being polite. Or a deliberately misleading effort by the politicians in power to look better than they ought to. And that is justified. And by the way, the current leader in the White House promised to drain the swamp, meaning to drain the behavior of people who were not being honest with the United States. True enough, this behavior by the government and the subservient behavior of the mainstream media is nothing new. But Mr. Trump has changed exactly nothing. Our next update has to do with an initiative very important being taken by three of the richest corporate executives in the United States. Warren Buffett, the leader of the Berkshire Hathaway empire, Jeff Bezos, the head of Amazon, and Jamie Dimon, the head of the Morgan Stanley bank, one of the biggest banks in the world. They got together over the last couple of weeks and announced something. They're planning a new health care company. It's not 100% clear whether it'll be health care and health insurance or one and part of the other, but that's not really the key thing. The key thing is what they said and what it means in announcing that they were doing something none of them has done, health care. That's not what Mr. Buffett does, that's not what Mr. Bezos does, and it's not what Mr. Dimon does. They are bankers, distributors, and a conglomerate, respectively. I'm going to quote their we want to do health care because we want it to be low cost and, and efficient. And here comes the key. Free from profit making, incentives and constraints. You know what they're saying? They're saying they're sick and tired of paying way too much money for the health care of their employees, who number in the many tens of thousands. They don't want to pay what all the rest of us pay. And why do we pay so much? Just a reminder, the United States spends more for its medical care than any other country on the face of the Earth. Roughly 18% of our GDP pays for health care. The second most highly paid health care system in the world is roughly half of that. We are way out of line with everybody else. Why? Because the doctors, the hospitals, the, the drug and medical device makers, the insurers, all of them hospitals, they work a monopoly together. They get together, help each other, and charge us enough money that they're all laughing on their way to the bank. Well, we suffer it. But Mr. Buffett and Mr. Bezos and Mr. Demon, they don't want to, they don't want to be extorted by other capitalists. They want a medical system. Let me read it to you again. Free from profit making incentives and constraints. So they're going to produce their own health care and they're going to make their own employees use what they produce because it's cheaper. It's a cheaper way to provide medical care for their own employees. I have been arguing on this program that we are all the victims of a medical industrial complex. Hospitals, doctors, drug and device makers and the insurers, they work together and have produced overpriced medical care. Now I have allies of Mr. Buffett, Mr. Bezos and Mr. Dimon because they too recognize, and they don't want to be victimized. Now, if they're going to do it for their employees, let me ask you a why isn't that available to you and to me? Why hasn't it always been, why are we still held hostage to a system that is not free from profit making, incentives and constraints? The third economic update for today has to do with, with the activities of the new kind of industry called Airbnb or HomeAway. These are services, I'm sure many of you are familiar with, that make it possible, if you travel, to stay not in a hotel, as you may have in the past, but in someone's home. And it makes it possible, if you have an apartment in a city somewhere or a home in the rural parts of the country, to make that available to travelers, to make a little extra money. Well, these services are having a lot of trouble, but mostly in other countries they have been either banned or rigidly controlled. For example, in Berlin, Amsterdam, Paris and Barcelona, just to take some major European destinations. And what's the argument being made there? Well, it's a very interesting economics argument. It goes like all that's happening with these services is that there's an effort to switch the hotel industry from what we've been used to, going to a hotel. That's a business that has built a building, maintains a building, maintains the rooms, cleans the rooms. You know, the whole bit as a commercial activity, typically hiring workers who are often in unions to do the work. What Airbnb, HomeAway and the other services like that do is switch it the business so that a good part of the rooms are not in a hotel or anything like one. They're actually your apartment. And why? Because they can make the price change cheaper and still make a big profit, but not because the costs aren't there. It's because the people doing this, the Airbnb and the other agencies, they don't have those costs. They've shifted those costs onto you and me. If we make our apartment available, it's an apartment we either build or rent. It's an apartment we decorate and heat and provision and we do that and we clean it before and after, as we maintain it, since we live there alive of the time, those costs are somehow not recouped. It's not a problem for Airbnb. We do it. And most people who do this don't count those costs the way a hotel would, very carefully to see whether it pays. So we absorb the extras that come with having folks stay over. We hope in the end it makes us more cash, but we don't really do that. And here's the next economic effect. While they're making money in these services and many of us who make apartments available are in fact subsidizing this whole thing, the companies in question make a lot of profits, very successful. But there's also another phenomena. Apartments that were once the homes of people are being increasingly removed from the market by people who buy lots of apartments or rent lots of apartments and in effect run little mini hotels in apartment houses where they can escape many of the costs and the taxes and so on that a regular hotel business has to pay. Once again, there's no technical innovation here. There's no sharing economy. That's not what this is about. It's about making more money than. That's what it's about finding a way to push the costs onto others so you can reap more of the profit for yourself. But as people aggregate, that's what they're called, aggregate apartments. To run them, like these sort of Airbnb hotels, they're driving up the rents in the United States because the apartments that are left for people to live in are shrinking. So the demand for apartments is what it always was. But the supply available for regular long term tenants is being reduced by these under the wire, let's call them hotels. No one counts these kinds of costs. No one asks, gee, if you're threatening the hotel business, losing people working in hotels their jobs. If you're raising the rents in a community, then maybe that ought to be factored into whether it's profitable to allow an Airbnb system. And if you really want to give that option to people who have an apartment, then you ought to take into account the effects and deal with it. The market doesn't do that. The market doesn't allow us to do it. The market doesn't make sure those costs are counted. It raises the question that gentrification has always raised. Why do we allow the decision about something so important as housing to be handled by buying and selling? So that the best housing goes to those with the most money, so that profit drives the rents and everything else? Housing has been in many countries, it still is in many countries, a public service precisely to make sure that everybody has a home and that the distribution of people in a neighborhood is diverse rather than being governed by money and prices and rents. And for those of you that are skeptical that the government could manage something as important as housing, I often find that a bizarre hesitation. Why? Because most of the same people really enjoy going to the public parks in American cities. Almost every city has one more, 10 of them. Here in New York City, we have Central park and Prospect park and many wonderful parks. You know what? They're maintained by the city, by public authorities of one kind or another who keep them well planted, who keep them clean, who keep them safe. We want the parks. We've given that to the government in most parts of the country, and it does a fine job. Why don't we do that with housing also? Maybe it would escape some of the kinds of problems that are bedeviling the housing industry, the rental industry, and so on. Before I get to my next update, I want to remind you we maintain 2rdWolff with 2f's.com and the other one is democracyatwork.info. that's all one word, democracyatwork.info both of those websites are available to you 24 7, no charge whatsoever, ever. You can follow us on Facebook, Twitter and Instagram. You can email us with your comments and criticisms and suggestions for what you'd like to see dealt with on this program. This is a way to partner with us, to share with us what you know, what you want. It's a way for us to reach many more people by asking you to make use of what's on those websites. So please make use of them. That's why they're there. We upload much more material than we can cover in this program. And finally, for those of you that are listening on the radio, on podcasts, if you would like to see this program as a television program, please know that you can go to Patreon, that's P A T R e o n patreon.com economicupdate and see this program as a television program. Okay? Some of you have noticed in my next update a remarkable thing that happened in the country of Saudi Arabia over the last several months. And since it's now come to an end, or nearly so, it's time for us to take a measure of what happened and to learn the lesson. A whole group of Saudi Arabian billionaires and millionaires were caught up by the current leader in what he called an anti corruption drive. This was really interesting. Lots of them. Something on the order of 381 billionaires and millionaires, most of whom were herded into the Ritz Carlton hotel in the capital of Riyadh. Okay? It's unusual for millionaires and billionaires to be rounded up, to say the least. It's doubly unusual for them to be rounded up in an anti corruption drive. And it is really extraordinary that instead of being taken to jail, they were taken to the ritziest hotel in the country. What's going on? Saudi Arabia is in trouble. As a country, it is totally dependent on the price of oil and gas. And when the price went down over the last couple of years, the economy of that country, like other countries that depend on oil and gas, Nigeria, Venezuela and so on, got itself into deep trouble. The new leader, relatively new, decided that he needed a large sum of money from these wealthy beyond words people, literally the 381 richest or nearly the 381 richest people in his entire country. He could very quickly take a portion of their money, he decided, and make it available to the government to see themselves through the very hard times. If he asked them for it, he'd probably get a giggle and a sneer. So he decided maybe he even tried that. He decided to do it more directly. He rounded them up, told them they were targets of an anti corruption drive, stuck them in a fancy hotel and said, I won't let you out until you give me a whole bunch of money. And he got it. Turns out they didn't want to be stuck in a fancy hotel. They wanted to ride around in their casualty expensive cars and do their usual billionaire thing. But he got $106 billion and he plans, he said, to use 13 billion to compensate the Saudi people for the rising cost of living. He's going to solve that problem that way. Notice it isn't that difficult to see a country through difficulty. Notice that these 381 richest people in Saudi Arabia, even after they had to fork over $106 billion, they're still the 381 richest people. The problem of getting the resources to solve a country's problems depends entirely on whether you go after it directly or not. In Saudi Arabia, they felt they had to, they did it. And we learn a lesson here in the United States. The richest people likewise have more than enough money to enable the government to solve the problems and still leave them the richest people. But they're strong enough so far not to have to do that. My next update has to do with an event that happened on Thursday, January 18, in London. An annual fundraiser for charities took place at the Dorchester Hotel. Three hundred and sixty of the United Kingdom's business elite, except for one, they were only men. They gathered together for the President's Club event. It's called Two undercover women reporters for the Financial Times took the jobs that were offered to. You'll love this. 130 hired hostesses to work for the 360 business elite men, yes, you guessed it. Groping, sexual misbehaviors of one kind or another. But this time it got caught. This time it got exposed. And in the most important financial newspaper in the country, the Financial Times. So no one questioned the veracity of it all. What is it? Another example that if you organize business with a few people at the top, those people will be tempted and by virtue of their power will be enabled to abuse those below them, whether it's men abusing women or men and women at the top abusing those whose jobs depend on what those few at the top decide. A hierarchical structure of business is an open invitation for this kind of behavior, which is why it is so old and so well known. All that happened were the British were caught out. The President's Club became a scandal. But the lesson to be learned, don't allow a few people to run everything because then you're a slave to whatever abusive instincts or desires they may have. A horizontally organized business, a democratic business where everybody participates in a decision would at least allow those who don't want to see this kind of behavior to have some power to change it. It shouldn't take undercover reporters after 33 years of this charity to break the story open. The last update we'll have time for today has to do again with housing becoming a very important subject in America, to say the least. First, rents in the United States today are higher than they have ever been in the history of the United States. Even more remarkable is this for every homeless person in the United States today. There are two vacant investor owned homes in the United States today. So let me repeat that. People are holding homes off the market, hoping to make a killing by getting a high paying tenant sometime in the future. The homes are empty, they're in the hands of investors who have no desire to use them, they just want to make money off of them. Side by side with many, many thousands of homeless people. When I say sometimes to you that we can do better than capitalism, this is a perfect example. We have a system that encourages people to become investors in households, in homes side by side with a system that pays so few wages or gives so few jobs that we have hundreds of thousands of people in this country without a home. And as I pondered this sort of situation, why we don't make housing a human right, why again, we don't make housing like our public parks, something that we give to ourselves as a people. Everybody has to have a park, to have a picnic in, to play with your dog, to play with your children, to, to get a moment of green, escape from your daily life. It's very important to have parks, which is why almost every city in town and village has one or more than one. But housing is also very important to your mental and physical health. Why don't we do it that way, that we have a shared housing stock for everybody? We don't have homeless people, but we don't do that, but other countries do. So I thought I'd close today by telling you what is being proposed in Great Britain by the Labour Party, Jeremy Corbyn, the new leader of the Labour Party, and by the way, in Britain they have a homeless problem. It is much smaller than the homeless problem here in the United States in absolute numbers and per capita in terms of the relationship to the size of the population. But they don't call it homelessness. They have a wonderful name which I hadn't encountered before. Here's what it's called in England, in Great Britain, rough sleeping. That's right, rough sleeping. Which kind of tells you pretty closely what we're talking. Homelessness, rough sleeping. Here's what Corbyn has said in response to to what he honestly admits is his horror at contemplating the suffering of homeless people in the United Kingdom. Number one, the government plans to buy empty houses and make them available. None of this vacant homes next to homeless people and also to empower local authorities to seize deliberately vacant housing. That's what's called housing held by investors to make money in order to solve problems. He's very critical of a society that builds luxury apartment houses that sit half empty while not taking care of the basic housing needs of the fellow citizens. I had this final thought. The British don't make such a big thing about their family values the way the United States does. But it is remarkable that a country committed to family values is so much of a failure when it comes to providing housing for vast numbers of people. What kind of a family value is that? Thank you very much. We've come to the end of the first half of Economic update. Please stay with us after a short interlude. We will be right back. Welcome back, friends, to the second half of today's Economic update. As often happens, we try to make it every month. My guest today is Dr. Harriet Fraad. She is a mental health counselor and a hypnotherapist in private practice in New York City. Our topic today is capitalism and mental health and it is a topic that, in a sense, we've been building to in the previous months when we've talked about a range of quite related topics. In addition to being here with us at the beginning of every month, Dr. Fraad is becoming well known as a specialist on the intersection of American personal, economic and political life. Recent articles that she's written have appeared in alternate and in the book Knowledge, Class and Economics. She appears regularly on the radio TV show Economic Update, namely this one, and also appears on such shows as Redacted Tonight with Lee Camp. Her work can be found on her website. Harriet Fraud. That's all one word. And the fraud is spelled F R a a d harrietfraud.com so it is with great pleasure that I turn and we're going to talk about capitalism and mental health. Thanks again for being with us. Let me start right off the bat with an observation and then ask your comment. People have been used to dealing with mental health issues, let's call them in the United States for a long time, but particularly in recent years, and all kinds of mental health issues have been raised which we're going to talk about and all kinds of reasons given for why we are experiencing these difficulties as much as we are. But I've noticed very rarely is the economic system in which we live among the causes or factors shaping mental illness. It's as if there's an unspoken taboo that we can think of stress or we can think of family issues, or we can think of lots of things that might contribute to mental illness or a weak mental health, if that's a way to put it. But talking about how the capitalist economic system that we live in contributes is some kind of scary place we're not supposed to go. So it's particularly important, I think, that we have this conversation that we explore that. So let's begin by tell me if I'm right or wrong about thinking that it's reasonable to say that mental health issues are, are an important and increasingly important problem in the United States today.