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Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives, jobs, debts, incomes, our own, those of our children. I'm your host, Richard Wolff. I have been a professor of economics all, all my adult life, and I hope that that has prepared me well to offer you these insights into what's going on in the economy we live in and upon which we depend. Well, we've had a big set of elections in the recent past, and elections are very complicated things whose impacts and consequences play out in complex ways over lots of time. So maybe now is a good moment to look back at some of the implications of those recent midterm elections in the United States. I want to start with something that got relatively little attention in Los Angeles. Voters had the opportunity to vote for and against the creation of a public bank. That's right, a bank owned and operated by the government, in this case the city government of Los Angeles, that would compete with private banks and offer services that private banks often don't offer or under different circumstances. The measure was not passed, but 43% of the voters were in favor. The people who pushed it, who want a public bank, didn't really have enough time. It needs more education, and this is, however, a very good beginning. I want to also mention that the head of the Los Angeles City Council, Herb Wesson, supported this effort, and that's an important support to get. What's at stake here is important also for everyone to understand. The United States already has public banks. The most famous is in North Dakota, which has had a public bank owned and operated by the state of North Dakota for over 100 years. It has been attacked by private banks who fear the competition. But both Republican and Democratic governors and legislatures in North Dakota have beaten back every symbol, every single effort to get rid of the public bank. That's how popular it is. It takes the money that is paid in taxes and fishing license and motor vehicle fees, and instead of giving it to a private bank, typically one of the giant banks in the United States, it goes instead into the state bank. In other words, state money is going to be used by the state bank, which then makes loans available on good conditions to state businesses and state residents. It's a public service, and that's what I'd like to mention about this important issue. A public bank holds the private banks to a standard. The private banks now have to do as well as that public bank, or nearly so, otherwise their condition of existence is removed. Why have private banks if they cannot or will not do for the public what the public bank does, it's a good way to hold them to account. It's a good way to measure how well they're doing, number one. Number two, public banks don't have to make a profit. If they do, whatever their profit is goes back into the state government's income because it's part of the state. And that means the state government doesn't have to raise taxes as much as it otherwise would. That's made the bank of North Dakota quite popular. And if it doesn't make profits, it's because it can offer loans on the basis of lower costs than a private bank would charge, which is good for all the borrowers who are the majority, not the lenders who are the minority. Get the picture? And finally, a public bank can make loans for what society needs, even if it isn't so profitable. A private bank, for example, will fund luxury housing because it's very profitable. A public bank might instead support public housing. Low cost housing, rent, low housing. You get the picture. Because we need it in society. And therefore the public bank does what we all need, rather than what the private bank does, which is driven by the profit of the investors and the shareholders, etc. Very important that Los Angeles put it on the ballot. Very important that 43% of the people supported it first time out. Keep at it, and this kind of thing will happen not only in Los Angeles, but in the other cities that are copying it and that are learning from what's going on there. The next issue has to do with reverberations around elections. And the one I want to talk about is President Trump's nationalism, the America first idea. It is already provoking real trouble between the United States and what used to be its allies. And that's going to have economic effects. Let me give you just two examples. Number one, the United States withdrew from the treaties it signed two or three years ago, with many other countries coming to a resolution with the country of Iran. Basically, Iran gave up developing its nuclear capabilities in exchange for the dropping of sanctions that had been put in place that hurt the Iranian economy. The United States, its major global allies, participated. Then Mr. Trump withdrew, by the way, he calls it a withdrawal. The rest of the world calls it breaking a treaty that you had signed. The United States used to criticize other countries for breaking treaties. It broke this one, and it went further. It threatened to punish any company in any country that did business with Iran, contravening the American sanctions. Now, the French economics minister, Bruno Le Maire, denounced the United States for this. They are not going to allow, he said, the United States to be the policeman of world trade. Try to imagine, those of you listening in the United States, what it would mean if the French government announced tomorrow that was punishing American corporations for doing business with some country that the French had a problem with. Or maybe the Germans could start that, or the Japanese or the Chinese or the Russians. What kind of a society, what kind of a world would we have? In the past, when countries tried to control each other this way, it led to war. And you ought to be worried by a country as big and important as the United States is imposing this kind of conflict. The Europeans are busy working out deals to get around the American sanctions. But there are French companies total, their big energy company, Peugeot, their automobile company, that are already saying they don't dare trade with Iran because they don't want to be hit by sanctions from Mr. Trump. But that means they're going to be hurt. Those companies, they're going to lay off workers, they're going to hurt the French economy in deference to America's decision to withdraw. This leads to trouble and conflict and tension, and those things lead to war. And I'm not saying something that's hypothetical. We know that from the past. And if you do not learn from it, you are condemned to repeat it. As we have been told, The French government, Mr. Macron, recently directly criticized the United States on the grounds that nationalism, his phrase now, is the opposite of patriotism. A patriot, he explained, at the celebrations of the anniversary of the end of World War I in Paris that Mr. Trump sort of attended. He explained, Mr. Macron, that a patriot saves his country from war and nationalist struggles. America first, Germany first, Japan first. Guess what? If everybody's trying to be first, trouble is coming. One way to work out world difficulties is to have conversations and try to find compromises. We could have done that with the deal with Iran. But the United States found it to be more useful for Mr. Trump's politics to simply withdraw with the maximum amount of bluster. The elections have also prompted falling out among the very people Mr. Trump gathered. Case in point, Gary Cohn, who was the leading economic adviser at, at the beginning, he, just in time for these elections, announced that, yes, he, like the Trump administration, tax cuts certainly help the businesses he is part of, but he doesn't like the tariffs. Tariffs, he explained, are simply a tax that all of us will have to pay. We'll have to pay more for the goods that come into the United States because the tariff raises their costs. It's a tax on, on imports. And even if we don't buy imports because the price went up and we turn to domestic producers who compete with imports, they have already shown what they're going to do. Given tariffs, they're going to raise the price of their goods inside the United States because now they can, since the imports cost more. And therefore tariffs are a tax on all American consumers. And Mr. Cohn doesn't think that's a good idea for an economy that's barely recovering from the last crash. My last economic update is one that is particularly important to me. I want to tell you about the kinds of struggles around this immigration issue that you may not have heard about and that have nothing to do really with immigration, but its companies making use of the immigration issue for their own profits. The case in point, the 711 chain of, of quote unquote, convenience stores. That's a franchise system. That means you have a big corporation at the top 7 11, and then lots of little folks scattered around the country who are called franchisees. They sign a contract with the big company which allows them to open a local branch of the 7 11, where you and I can shop. And there's constantly a struggle between the big company, which requires fees to be paid and particular goods to be purchased by the franchisee from the parent company, even though the franchisee is his own business. And so there's a constant tension. Now, 711 is very aware that for many years all kinds of immigrants have worked in 711 stores, some documented, some undocumented. As long as the relationship between the parent company and the franchisee was mutually profitable, everybody looked the other way. But recently we've had a problem in our economy, as you're all aware of. And one of the ways that problem plays itself out is there are too many fast food convenience stores in the United States. The rush to profit from them, produce more of them than we as a society need. So it's getting difficult for them to survive. At that point, the tension between the parent company, seven eleven and the franchisees gets dicey. The parent company wants to pull more out of the franchisee and the franchisee is threatened. Here's then what happens. Turns out that 7 11, according to the news stories, particularly Bloomberg, knows where the immigrants are, where the undeclared immigrants are, and it has informed the ice. So there are raids on stores. Some of you have seen them on TV and, and in the newspapers. The ICE agents coming to get the immigrants, either working at or shopping at a 7:11. You might think that's the duty of the ice, but they didn't know that they were there. That's the parent company ratting them out. Why? Because if there's a problem at a local franchisee and they've done something like hire immigrants that they shouldn't have hired, that's a way for the parent company to take the franchisee's business owners away from him. In other words, the immigration issue is being fostered and promoted by people who have nothing to do with immigration, who are simply using it in their own profit driven struggles, in this case between the parent corporation and the franchisees. So when you hear all the noise about immigration, be aware there's a lot more going on than you're being told. 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 an enormous help to us. It's easy for you to do and it's a way to build our relationship and our partnership. Likewise, please follow us on Facebook, Twitter and Instagram, which you can easily do by checking out our website democracyatwork.info and and of course, I always want to thank our Patreon community of supporters for their ongoing support, for which we are very appreciative and also very much feeling a kind of solidarity that makes this program possible. Stay with us. We'll be right back. Welcome back, friends, to the second half of this edition of Economic Update. I want to continue the focus on elections. Now that the immediacy of the elections is behind us, it is time to look at what elections do and don't do. With a bit of hindsight that we now have about these most recent ones, there are some really important comments to make of the sort that don't get much attention elsewhere. Let me begin this way. Elections are just as important for the issues they highlight as they are for the issues that they marginalize or even ignore. They're important for the people who get engaged enough to vote, but they're also very important for what they can teach us. In terms of all the people who don't vote who are not inspired or drawn these midterm elections, let's be real clear, the majority of people who are eligible to vote in the United States did not do so. According to the New York Times, 48% of the eligible voters bothered to vote. A lot of important lessons are there, but the general point I want to leave you with on this is that be sensitive. We need to be to what the elections don't do. Just as much as what they do do. I'm going to use three examples to drive this point home. The first is the issue of gun control, an issue which seems to be important for significant numbers of voters. We have those who want to limit the availability of long and short guns, pistols and rifles and all of that, versus those who want free access, open access for Americans to buy and sell and trade virtually any weapon that can be produced. I wanted to first ask what's this about? Because it's a reasonable question. Partly because in most other advanced industrial countries like the United States, there is no gun control issue. It doesn't appear on the ballot, it's not discussed in the newspapers, it's a non issue. So it's sort of interesting that the United States would give it the importance that our elections seem to convey, as best I can tell. Here's the reason, the basic reason for the interest in gun control. Large numbers of Americans feel, and I think they're quite right about this, that they are being increasingly told what to do and how to live by the employers who don't give them enough money to do much of the sorts of things they thought they would get in life that they were led to expect that were part of the American dream. And they don't like that. And they suffer from that. And likewise they don't like the politicians who basically serve the, the employers telling them likewise what they can and cannot do. When there was enough left that they could do, they could tolerate it. But the allowable space, the earned income, the opportunities are shrinking and a lot of Americans feel it. Well, one of the things they can still afford to do is to buy a gun, a weapon, and to feel as though that gives them somehow more power because they're losing power elsewhere in their life. They can have that thing that a military person has or a police person has, the gun, and they want one. And the interesting thing is not that they want it and that they would like to own one. The interesting thing is how important it has become. It has become a symbol. I am going to fight for my right to buy and own a gun as the symbol for what I would like to be able to do, which is to buy and own a whole lot of other things that are being kept from me, that are being denied to me. It has been a fantastic achievement of the gun industry to figure that out, to figure out it can go to the mass of people who might otherwise have looked upon a gun like a million other things. They buy a car, a stove, a fridge, a sofa. No, no, no. The Gun has become the important symbol of fighting back against a society that is constricting you. Wonderful for the gun industry to be able to tap into that. Other industries are jealous that they haven't been able to become the symbol of people fighting back. The interesting criticism that the left could have developed but didn't in America was to mock this, to say to the American people, hey, you could fight back. You could change a system that constricts your life. You're quite right to demand it, but buying a gun ain't gonna do it for you. Buying a gun is a cheap, inconsequential way to fight back. What we need is social movements that actually change your situation so you don't have to find an obscure symbol and one that's dangerous to boot as your way of fighting back. Your substitution for really changing what's bothering you. It's ironic that people who can't afford to pay for an education for their children fight like blazes to hold a gun in the closet where they live. Yeah, you can afford that way of fighting back because it doesn't challenge the system and it really doesn't change your life very much, does it? And it's a substitute for what might change your life. And if people said that more often, it might lead the folks fighting for a gun to begin to think about doing something else. The second thing elections don't do or do is not only distract us from the basic issues we have by focusing, for example, on. On gun control. But here's a basic issue that doesn't appear on the ballot at all. Do we want a capitalist system or do we want a socialist system or do we want a mixture? And if we want a mixture between them, what proportion? 50, 50, 25, 75, what? Very important question for how we live our lives. Very important question for what we can afford in our lives. But you won't see it on any ballot. It's kept away from the election. In this case, what the election shows us is important is what's not on the ballot. What's kept off the ballot. By the way, in other countries, it is on the ballot all the time. So once again, we're sort of unique and true because of Bernie Sanders particularly, we now have the word socialism floating around. But typically in it's about more or less, it's really among Democrats, isn't it? Like Mr. Sanders is ambiguously an independent, but he's also a Democrat. So the socialists seem to be the Democrats who want to do more for peoplesocial welfare, social supports, state supports versus those who don't want to do quite so much. The centrist Democrats a la Clinton and Obama. But the real question is a program of change. Socialism is a change of system. It goes away from capitalism to do something else. It would be interesting if we could have an election. Do we want that? Would we like a different system? And by the way, let me take as an example something I've mentioned before on this program. There are countries doing that. In Great Britain, the Labour Party under the leadership of of Jeremy Corbyn has proposed that if they get the election for Prime Minister the next time it comes, they will create a worker cooperative sector of the British economy. That's right. They will create a huge sector in manufacturing and services across the board where the organization of businesses will be democratic worker co ops, not capitalist enterprises with shareholders and all the rest of it. And they say vote for us. If you want to have a choice in England between capitalist enterprises from whom you can shop and where you can work versus worker co ops from whom you could alternatively shop and where you could work, that's giving the British people a real choice about their economic future. We don't have that in the United States. Let me say that again. Our elections deny us such a choice. And the elections are very important because of what they're denying us until we demand otherwise. And then there's the immigration issue which was so important. Let's take a look at that as a case in point. When a society falls apart either because of war or because of economic downturn, and with the United States it's the latter, and in Europe it's in latter the breakdown of the economy since 2008 and the big crash. When that happens, people are frightened and for good reason. And they feel their economic security is threatened. And for good reason it is. And as that happens, frightened people worried, look for something to help them. And here's a way at that moment that they can go. They don't have to, but they can, especially if pushed by politicians who see a career here. They can decide that they will be safer if they stop being part of the larger society and start becoming more actively part of a smaller society and make sure it's taken care of. So where before you might be an American part of a diverse multicultural society, you get frightened that that identity you had wasn't secure, so you better hunker down and be a white person or a Christian person or a Southern person. You look for other identities and you can be shifted from being an inclusive person who welcomes all the others in the community to becoming an exclusive person who sees others in the community as competitors. In a society that's falling apart, you can become very angry that those other people seem to be getting preferences you're being denied. If you're white, you think black people get a preference. If you're a native born, you think an immigrant, even if your grandfather or your parents were immigrants, suddenly the immigrant isn't the hero who makes America great, becomes the threat to your own well being. That's what the immigration issue was. It was, and it is an effort to tell the American people being squeezed by big business that their problem isn't the squeezing by big business. It's actually the competition for the crumbs that remain from others against whom they should turn. That's why they should close the border. That's why they should be hostile. They should get angry at Democrats who are portrayed as the people who in exchange for votes will let these other people in, who will be given advantages that hurt you. This kind of setting of people against one another has a fundamental to keep people away from facing the economic system that isn't working to find a solution that hurts others like you rather than changes the system that hurts us all. Elections in politically complicated societies like ours are as important for what they don't put forward as for what they do. Our elections do not put forward the economic crisis and the breaking apart of a traditional capitalism. That is our problem. They focus us instead on gun control, on immigrants, on a variety of issues that they hope will distract us from the big economic questions that are our problem. Politics and economics are complicated, interactive systems. We shouldn't be fooled into imagining that because of what we vote, we are actually able to control our society. We will continue this conversation as we always do for our Patreon community. You can easily continue if you go to patreon.com economic update and for all of you that watch and listen, I look forward to being with you again next week.