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A
Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives. Debts, jobs, incomes, our own, our children. I'm your host, Richard Wolff. I've been a professor of economics all my adult life, and that's the basis upon which I offer these economic updates every week. The theme, if there is one today, would be the gap between the economic realities of what's going on and the glib political ideological promises that fill the airwaves not only during election season, but most of the time. And I'm going to give you some examples of that gap. First, all the posturing by President Trump and his allies against China. It's really remarkable what's going on. Having been accused of being too close to the Russians, he's showing us that he's nasty towards the Chinese. That's supposed to compensate, I suppose. Then he has those advisers who, who think that the United States is in a death struggle with the Chinese and that they have to be hurt or damaged or slowed down or something like that. And then there's this strange argument about how the United States wants more concessions from the Chinese. This is a mystery to me, because what does it mean? You want the Chinese companies to be hurt and to make a better deal for the United States, or do you want the better deal from the American companies that are active in China? Roughly half of what comes to the United States from China comes from companies that are subsidiaries of American corporations. So is the Trump administration demanding concessions from American companies? And if so, what does that mean? If you hurt those companies, how will they adjust their activities in the United States? This makes very little sense, or at least whatever sense it has has not been explained. And are you demanding things from the Chinese government, and if so, how do you prevent against them then taking that out on the American companies that are There a very strange theater going on here. But that's not the main point here. The main point is to understand a certain reality. The Chinese are now the second most important economy in the world. They're very strong, they're very large, and they have a lot of influen. I'm going to give you one example of what is going on. China is a major buyer of three American grains, soybeans, corn and sorghum. All are drastically down in terms of the exports from the United States of these crucial agricultural commodities. The farmers and the farm states that depend on the production and export of. Of soybeans, corn and sorghum are really hurting the ramifications of their difficulties, which mean, for example, that they cannot repay loans from banks that they take out as a matter of course. It means that other countries are filling the Chinese demand for those products, and the Chinese are unlikely to go back to the United States afterwards because they don't want to be caught in a dependency that has already shown itself to to be dangerous for them. Have this been thought through? Is the benefit to the United States from all of these secondary consequences worth the theater of being hostile to China? Well, it's worth it politically for Mr. Trump, but for the economy of the United States, unlikely. The second update I want to talk about is Italy. Italy has what we call these days a populist government, mostly of the political right. And here's what they're they are reacting to the rage and anger of the Italian working class. There's no other way to put this. The Italian working class has been really hurt by the crash in 2008 and the austerity ever since. They haven't been hurt quite as badly as Greece or even as Spain. But they are a larger economy than either of those two countries, and they have been really hurt. And they've had a suffering of wages that have gone nowhere, cutbacks in government programs, really bad. And in their anger, they decided to vote in these outsiders, much as in other countries, angry workers are voting in new and different political parties, left and right, because they're disgusted with the center left, center right, that was in charge of the buildup to the great crash and then imposing austerity afterwards. The plan of the Italian government now is to try to save the situation, because when you screw over the mass of people you're going to get, particularly in European countries where there are socialist and communist parties and newspapers. That's a much bigger part of those societies culture. You're going to get people who are angry at the system are able to say this system isn't working. Now, capitalism is a system, the core of which is the business community. And that's always and by that I mean the employers. That's always a tiny minority of a society. And for them to survive on top of the economy, they need what's called a mass base. They need a lot of support. In good times, they're able to get that one way or another. But when the economy fails, the majority of people, they lose it. And then they get frightened at their political security that the very continuation of capitalism becomes a question. And what they do then is extreme. The Italian government is now proposing, in a difficult economy, to have the government spend enormous amounts of money helping people out while cutting taxes on businesses and rich people. Everybody's getting a picnic now. Of course, the only way this works is for the government to borrow more and more money. And that's the lesson here. The buildup of debt, either on the part of the government or on the part of the public, credit card debt, student loan debt, car payment debt, mortgage debt, debt is a way for capitalism to secure mass support when they can't do it any other way anymore, when they have angered and alienated the mass of the people, they try to hold on to their support by giving them a debt explosion so they can maintain their consumption. The Italian government is going to provide services and hire lots of people to do all kinds of things to keep the systems going by the support of a mass of people. And the price of it is the deep indebtedness both of the government and of the mass of people. And that is what has to be understood. This indebtedness is the way for this system to keep going. And of course, when people can't borrow anymore and when the government can't because the lenders don't have confidence, that's when the price will have to be paid for this peculiar way of keeping a system going when it can't serve the mass of the people in a normal way. My next update responds to questions you keep sending me, even though I've dealt with it once before. Lotteries. I understand lotteries are a fantasy. We can indulge by a ticket, buy a scratch, off by a number. But I want you to understand the economic costs of lotteries. And you make the decision whether on balance you're for them or against them. But you need to understand the costs, which of course the state governments that use lotteries don't want to stress on being polite. Let's go through it. A lottery. A lottery takes a lot of money from a lot of people. Each one buys five bucks, ten bucks, whatever it is, most people buy a little. So a very large number of people give up a little bit of money to make the few winners who win anything significant very rich. Let's go through that again. Large numbers of people who don't have much money give up a little so that a few people can become rich. Now, those many who buy the tickets, they would have used those few dollars to buy goods and services which would have given people jobs producing and selling those goods and services. If you put all that money in the hands of 1, 2, 3, 4, 5 people, they're not going to spend all that money on Goods, services, because they're going to be so rich, they're going to save a huge portion of it, which means that money isn't getting spent on goods and services. That's a cost. In an economy where there's already trouble buying things, you're making that process worse. Moreover, the few who win will now take these enormous sums of money and invest them in the stock and bond market. You know what that does? It drives up the price of, of stocks and bonds. 10% of the people in this country own 80% of the stocks and bonds. So by moving money from little people who would never have used 5 or $10 to buy stock, collecting it all and giving it to a few rich people who buy stocks and bonds, you're helping that part of the economy that needs at least while you are depriving the average buyer and seller of goods and services of what they do need most. Next. It's a kind of tax. The vast majority of people who buy lottery tickets do not ever see that money again. They are paying money to the government because the government takes the lion's share of that lottery ticket money that you're paying. So the government gets a revenue, doesn't have to call it a tax because it's voluntary, but it's a way of the government not having to tax corporations and the rich because they're getting more out of average people by calling it a lottery, even though 99% of them will never see anything from that other than losing the money. And since a good part of it has to be given to a few rich people, it's not even as good as a tax. A tax would have at least taken the money from everybody, given it to the government who could then use it to provide some services. But, but with a lottery, a good chunk of it has to be given to a few individual rich people. And though that's not available for the government to do something. And finally, as well known, this kind of thing is a form of gambling and therefore is a boost for the addiction problem that some gamblers have. You should have all that in your mind before you think of a lottery as purely the fun part about winning a lot of money, which very few people do. The last update that we have time for is kind of a shout out. Grinnell College in Iowa, a well known college, been around a long time, a college that is committed to social justice and things like that. I've had many of my students come from Grinnell. I was struck that the undergraduates, the undergraduates who get jobs in the dining Halls in the libraries have formed a union. That's right. Undergraduates formed a union. I've never heard of that before. They did it a couple years ago and they've been very successful. Grinnell College, despite its commitment to social justice, which is about as serious as Harvard and Yale's commitment to Lux et veritas and all the other things they claim to be in favor of. Hired anti union lawyers made statements that a union would erode the egalitarian nature of the college. I guess paying undergraduates as little as they did enhanced the egalitarian nature in some brand of theirs. There the union has been successful. They had not had a wage increase in seven years. They've now had a 9% wage increase. They've gotten bonuses for those who work more than 110 hours a semester. They've got paid rest breaks, a formal grievance procedure that has won 146 student dining hall employees their jobs back when they were wrongfully terminated. And here's something they did I found striking. They demanded and got equal wages for high school students who have jobs in the dining halls alongside the undergraduates. So despite the effort of the college to squash them, they have persevered, they've won and they've done a world of good for the students there. That's a sign, particularly important because it's young people of an understanding of how collective action can transform your work situation and have a better shot for everybody than an individual attempt to escape somehow. Well, we've come to the end of the first half of Economic Update. I want to remind you please to subscribe to our YouTube channel. It's a very important support for us. Check out our website@democracyatwork.info where you can follow us on Facebook, Twitter, Instagram and I also want to urge you to look at the ways you can partner with us which are available on that website. And finally, a shout out to the Patreon community that provides us with support and encouragement that is invaluable to what we do. If you would like to see all of that, take a look at our channel there. Patreon.com economicupdate Stay tuned. We have a wonderful interview in the second half of today's program. Welcome back friends to to the second half of Economic Update Today. I am very pleased, as I have occasionally been in the past, that I have a guest, Professor David Harvey, to talk to us about how he views through his Marxist lens what's going on in the economy we depend on and live in. But before we Jump in. Let me introduce, for the few of you who don't already know who David Harvey is. He teaches at the Graduate center of the City University of New York. He's written extensively on Marx's capital and the insights it offers into the workings of contemporary capitalism. His most recent book is Marx Capital and the Madness of Economic Reasoning. Normally, my introduction might stop at that point, but I am very proud to announce that David Harvey's latest project has been realized with the help of Democracy at Work. We are proud to announce that on Thursday, Nov. 15, 2018, Democracy at Work launched a new podcast featuring Professor David Harvey. It's called David Harvey's Anti Trump Capitalist Chronicles. It is a bimonthly podcast that looks at capitalism through a Marxist lens. You can find Anti Capitalist Chronicles on itunes, on Google Play, and at our website, democracyatwork.info if you would like to support this project, Please go to patreon.com David Harvey, ACC where of course, the ACC stands for Anti Capitalist Chronicles. So with that, let me turn to David and pose the questions for today. And thank you.
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First of all, thank you for having.
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Me for good to be here. And thank you for producing these podcasts, which I think will be an important resource for all kinds of people around the world as this program travels. All right, we're in the election season or the immediate post election season. So I want to begin by asking you in a general way, what do you think about these elections that just happened here, these midterm elections? What lessons, what insights? What is the meaning of all of this as it looks to you?
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B
Well, something that's become very, very prominent about US Elections is how undemocratic they are. It begins with the fact that the Senate is a totally undemocratic body. 20% of the population of the United States actually controls 60% of the votes in the Senate. And what we see in the elections this time is a gap between what happened in the Senate and what happened in the more popular based House. The Senate went even more Republican, gaining two seats, maybe four seats, who knows? And it seems to me that the founding Fathers probably had some fear of the tyranny of the majority, and they were particularly fearful of the tyranny of the urban over the rural. And they protected that for a little while. But now it's transformed, with that distinction fading into the tyranny of the minority over the majority, because Nebraska and North Dakota and South Dakota can simply outvote New York and California. So this is a real, real problem. And I think this becomes very Obvious in the results of this election.
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I noticed one statistic on one of the television channels that if you added up Republican and Democratic votes for Senate, just for Senate, 57% of the votes went to the Democrats and 40, whatever it was, 3% to Republicans, even though the Republicans gained and the Democrats lost. Extraordinary.
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This is astonishing. But the second thing I think is really interesting, which we might have a conversation about, is to think about the class character of the American electorate right now. I mean, I think the case was that in the 1960s, you had a class formation which was based on a fairly affluent white working class, strongly unionized, and with a great deal of political power in the Democratic Party. Basically, that power has been destroyed over the last 30 years. But now we're seeing a new power emerging, and I think that we start to see signs of that in terms of the kinds of people who are being elected and the kinds of people who are running, particularly on the Democratic ticket. And I was thinking about this the other day when I was flying and I was flying through Dallas Airport, and I looked at all the ground staff and I looked at all the people servicing the airport. And then I read a statistic that said in Atlanta, the biggest employer of labor in Atlanta is the airport. And you kind of go, who's employed there? Where do they come from? And I think you would find three categories. One would be women in the labor force. The second would be African Americans or people of color. The third would be Hispanics. And it would seem to me that we've got a new working class which is made up of some sort of alliance potentially between those three categories. And when Marx used the term a class in itself, I think that's the class in itself. The big problem is, will it become a class for itself? And I think when you look at somebody like Stacey Abrams, that seems to me to be a tremendous kind of signifier of where Democratic Party politics could go. On the other hand, I think the, you know, Nancy Pelosi's of this world don't want that kind of. That kind of thing to prevail. But I think we have a potential class for itself which if it could form an alliance and not get into fisticuffs with each other, which we know they have done historically, encouraged, of course, a lot by the bourgeois media, that in fact, we would have a very, very different kind of electorate emerging in this country.
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A
I know you didn't say this, but is an implication of what you're saying that it would be a mistake to look for some sort of Resurgence of a traditional labor movement almost as a reaction to what has happened to worker, to wages and working conditions, I think.
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Well, it depends how you define the traditional workers movement. I mean, I thought for a moment when I was going through this, these airports, suppose all the airport workers in the country decided to stop work for two days.
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Yes. Unbelievable what it would do.
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Unbelievable what. I mean, that's where the power lies. We used to think that the strike of General Motors or something like that, or in the mines to bring the thing down that is no longer there. But all the airport workers went out on strike and kind of said, you know, we're fed up with the way in which this country is run. We want a reform of the electoral system. We should stop this voter suppression and all this gerrymandering and all this kind of stuff. That's where the power lies. And I don't think we have quite understood that that is where the heart of a contemporary working class really is.
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And there again, women, women, people of color, Hispanic Americans, probably are the dominant group at every airport.
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Yes.
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At least as you walk through them. That's certainly what everyone I go through just looks like that.
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And so I think I'm hopeful that there will be a politics that starts to emerge a bit from that group. And we shouldn't be looking to the auto workers and the miners and the steel workers anymore because they've been disempowered. And of course, we see the residual of that in the sense of, you know, what's happened to the population of Michigan or Ohio, Detroit or Cleveland. Yes. And all the rest of it. So maybe we should start thinking about what is the class in itself right now, and what is the class for itself?
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Going back for a moment to the elections, do they make any difference to the broad movement of capitalism, the outcomes here?
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I think the outcome is satisfactory. From the standpoint of capital, I think they've thrived on gridlock, and I think the election is not exactly a gridlock, and. But it's close to a gridlock, and I think that's satisfactory from the standpoint of big capital, because they don't want an activist Congress. They don't want legislation to be passed apart from tax reform and a few things like that. They're happy for Trump to rule through executive order as much as possible, and he will do their bidding, I think, adequately. So I think from the standpoint of capital accumulation, yeah, there'll be some difference. Obviously, with the House in the hands of the Democrats, though, it's going to depend a lot on the new wave of influx of Democratic representatives, and particularly whether the women, the strong movement of women in there is going to really make a political difference as opposed to just being absorbed into the status quo.
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How do you see the right wing in terms of. In this country, the Brazilian elections, which were kind of an extreme version of that, but the movements in Europe, how does that fit into the picture you have of what's going on? What is this resurgence about?
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Well, I think one of the things we see from these elections is that Trump and Trumpism, if you want to call it that, is pretty strong, cannot be counted out. Yes, it's minority, as we see from the House results, but it's strong, it's powerful, and we shouldn't underestimate it.
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A
Do you think it's a. Well, let me provoke a little bit. Is there merit to the following basic story that you've had a crash in 2008. You've had a lost decade for the mass of working people where their wages and their working conditions and their job security have been pretty badly hurt. They were told that the bailouts had to go to the very people who brought the crisis. And then they were told there was no money left in the government to help them. So they get an austerity. I mean, it really is quite a scene. And you provoke an angry population which turns against the center left, the center right, the traditional two parties, Conservative, labor, Republican, Democrat, Italy, over and over again. And because the left, in its initial promise to undo austerity, I was thinking of the French socialists, the Greek socialists, they didn't deliver. They voted in to stop an austerity and then became the administrators of it. So then the mass of people, you know, it's fanciful, but they turn right. I mean, the left disappointed them. They're gonna try the right wing, which makes crazy promises which probably will do the same, but it stalls off the reckoning moment. Is there something to this?
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B
I think there's something to it, but I'd add a few wrinkles, please. One of the wrinkles would be that if you look at who disempowered, for example, the traditional working class, it was capital that disempowered them. But on the other hand, the media is not going to say capital did it. They're going to say, where did it come from? Oh, it's China or it's immigrants. So there's the other side to the right wing thing, which is the anti immigrant and the anti foreign competition.
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A
Keep the anger of the masses away from the economic power.
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Absolutely. You do not blame the center of economic power, even though you're alienated from it. And I think there's difference from opposing something and being alienated from it. And I think that what we see right now are alienated populations, but not yet opposing it. Not yet.
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A
Like in itself and for itself.
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Right, exactly. That's why I think this kind of has to think more clearly about this in itself and for itself. Politics is critical right now for the left.
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A
Will the left be allowed to do it or will the right take itself to the point of.
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Well, I think the left, as it did before, I think the left is beginning to. I mean, I'm just a little bit encouraged by the Labour Party in Britain. I think that it's actually mobilized, it's grown, it's become a little bit more sort of articulate in the idea that it's going to take back into the public domain a lot of basic services, which, as far as the British are concerned, if you kind of say that the privatized transport and privatize water is more efficient and better than public administration, everybody in the country just laughs at you. So people know that. And I think that there is an opportunity for the left right now to actually strike out in a more sort of vibrant kind of way, saying, bring these things back into the public domain. We should not underfund that public aspect of, say, housing and education which we've been doing through the austerity politics. We should overfund them, if anything, because this is a moment when I think the left, if it pushes hard on that, we'll start to get, you know, real resonance in the population.
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David, we do have to stop here. I want to remind everyone that we will continue this conversation with David Harvey on our Patreon Channel. If you're interested, just go to patreon.com/economic update. For all the rest of you, I hope you are as moved and as inspired by this as we all are. Thank you for joining us and we'll be back to talk with you again next week.