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Sam. Saint gonna change. Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives, our jobs, our incomes, our debts, those of our children and those looming down the road. I'm your host, Richard Wolff. I've been a professor of economics all my adult life. And now I try to bring some of what I learned over all those years into this program and into the analyses of what's been going on recently in the economy we all live in and depend on. Before jumping into the updates that mark the first half of this program, I wanted to mention, as I often do, that for those of you interested in what we're about to do and in this program generally, we maintain two websites where we urge you to go because we upload enormous amounts of material there that go into what we do here on the program in much more detail. The first one is democracy at work. That's all one word, democracyatwork.info info. 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Okay, let's jump right in. I want to shout out to the new government in Australia. Why? Well, they're conservatives, which would not normally draw that much attention from me, but they're conservatives who seem to have understood that, yes, they won the election, but that the mass of the Australian people want to see some real changes because they're not happy with an economy that serves the 1 or 2% at the top at the expense of everybody else. So be surprised with me to discover that the new government intends to put heavy taxes on the major banks in Australia. That's right. Taxes totaling $6.2 billion would be raised over the next four years by a new levy on the big five banks of Australia, Anz Bank, Westpac, National Australia Bank, Commonwealth bank and Macquarie. It is interesting that there's a recognition on the part of the conservatives who rule in Australia that they've got to begin doing things not normally associated with conservatives, or else the growing anger of masses of people all over the world against old established political parties will blow them away, as it has so many others. The next update has to do with the Dakota Access Pipeline. We've talked about that before. That is the very controversial pipeline running across parts of the Dakotas and in particular across lands that have deep meaning and a long history with Native American populations in that part of the world. Obama had held back from allowing the pipeline to proceed. Trump has changed all that. The pipeline has proceeded and the opposition has grown along with this development. And I wanted to focus on an economic aspect of this struggle, which is far from over, by pointing out that the only way that Energy Transfer Partners, the parent company pushing all this through, can keep working at the Dakota Access Pipeline is if the banks who fund all of this continue to do that. If those banks withhold or withdraw from participating, then the money needed to push this project through to violate the lands of the Native Americans that live there, and you might think, given the history of the United States, that that violating the lands, the few lands left to the people who were originally here, is something an American company and an American society would shrink from doing. What's interesting is that the banks that have withdrawn under popular pressure have been so far mostly foreign banks. The ING Bank, a huge Dutch bank, in March withdrew, got rid of its loans. That was followed shortly by dnb, the major bank in Norway, and the Norwegian pension fund, a very important fund in that country, has also divested itself of anything having to do with energy Transfer partners because of the Dakota Pipeline. Even some American cities have taken interesting action. Seattle, Davis and Santa Monica, California in particular cut their relationships to the Wells Fargo bank with whom they had done business, because Wells Fargo is one of the major banks funding the Dakota Access Pipeline that has so far resisted and refused the efforts of public and also of its own shareholders to get it to stop doing this. So I wanted to call out both Wells Fargo for its responsibility. And there's something particularly nice about Wells Fargo being in this position since they have just been raked over the coals for the last year and a half for having literally created Hundreds of thousands and perhaps as many as 2 million phony accounts, phony savings bank accounts, phony checking bank accounts, phony credit card accounts, particularly targeting Hispanic American populations, got caught doing that. And now we find out that the same stunning leadership that led them to phony up all those accounts is also driving the decision to keep funding the particular path of the Dakota pipeline so that it violates the. The religions and the history and the traditions and the land ownership rights of Native Americans. The other bank that should be called out is the bank that leads the biggest group of funders, and that's New York's Citibank. So if you're wondering who's making that possible, it's Citibank and it's Wells Fargo, once again showing that the big banks in the United States not only are able to manipulate interest rates and to manipulate foreign exchange rates and to help cause the meltdown in 2008 with the mortgages and on and on and on, but they are also behind some of the most controversial and ugly investment projects we have. My third update has to do with the elections in France this last week. And really here, what I'm concerned with is, again, the economics of what's going on here. And. And that got lost in the media hoopla. Under French law, there are two rounds to the presidential election. You have many candidates. Actually, there were about 11 in the first round. And the two who get the largest number of votes then have a runoff. And that runoff was then decided this last week between Marine Le Pen, the candidate of the far right wing in the French politics, a party that wants to put France first, that wants to literally make France great again. They took the Trump slogan and is ferociously anti immigrant again, similar to what you get from Mr. Trump and others like that. And on the other hand was Emmanuel Macron. He's an interesting character. He won. He beat Marine Le pen pretty much 2 to 1 in this second round. And he will be the new president of France. But that's what the votes say. What does the analysis say? What's really interesting is that if you count up the votes Mr. Macron got as a percentage of all those who were eligible to vote, he got 43% of the vote. That's how he became the president. Or to say the same thing another way, 57% of the French electorate didn't want him. Either voted for someone else or abstained or destroyed their ballot, which millions of French people can do and did do in this election. Now, why would a majority of the French voters not want Mr. Macron. And what lesson for us is in there? Well, the good news, you might say, is that the French were not prepared to vote in their own local Donald Trump. Marine Le Pen was rejected. Clearly, the French are not yet, despite being angry about what's happening to the French working class, angry that European Union has meant big profits for those at the top the French society, and loss of jobs, loss of income for the mass of the French working class. Yes, they're angry, and that's why they voted in the numbers they did for Marine Le Pen. But they don't see a solution in beating up on immigrants, literally or figuratively. They don't see a solution in withdrawing from Europe. That doesn't give them any reason to believe they'll be in better shape. Just like getting rid of a few million immigrants isn't going to transform the French economy either. So the majority wouldn't go near Marine Le Pen, but a majority didn't want Mr. Macron either. What's that about? Mr. Macron has never held elective office before. His job, before becoming the Minister of Economics in the now ended Socialist government of Hollande, was as a executive in a Rothschild bank in Paris. Not exactly the kind of preparation to be the president of a country trying to figure out where to go in an economic global capitalism that is not doing real well for most people. So Mr. Macron has very little to recommend him. Moreover, when he was the economy Minister for Francois Hollande, the now disgraced former President of France, he was famous for trying to alter the labor rules in France, making it easier for employers to fire workers, making easier for employers to get out of all kinds of obligations they have to their workforces, obligations that the workers in France spent a century struggling to acquire and, and to achieve. In other words, he is a friend of big industry. Now, it may surprise you that he was a minister in a socialist government, but it shouldn't. Socialism in Europe, as in so many other parts of the world, is in an advanced state of decay. A minority of the socialists still believe that we can do better than capitalism, and they want socialism to mean something about doing better than capitalism, having a different system. But Most socialists, like Mr. Macron, really believe in capitalism, have no quarrel with big business and most of what it does. They just think that there should be a good safety net, you know, some public support for the mass of people in the way of subsidized or cheap or free education, a national health program for people, things like that. So that most socialists in European countries, this majority group, are really quite like the Democrats here in the United States, only a minority want to go beyond it. Mr. Macron is therefore what you might call the center of French politics. He proposes to continue the austerity program that made his predecessor so unpopular. He continues, he says, to want to change the condition of working people. This is only going to make the French working class even more angry, even more bitter than it already was. And the only real question in France, and it is the same question everywhere else, is where will the increasingly disgruntled working classes go? To the right, into a kind of Le Pen France, Trump, America, Conservative Party, England, a kind of anti immigration, anti Europe, focusing its anger on the European Union and immigrants, even though thoseneither one of them are the cause or the root of their problem? Or will they go to the left, becoming the old kind of socialist that is saying we can and should change the basic capitalist system and not make ourselves dependent on a system that has worked so unfairly, produced such inequality, had such collapses as the one in 2008. So that's the real issue. Will the increasingly angry working classes go to the left or go to the right? And one thing is clear from Mr. Macron and from Mr. Trump and from Theresa May in England and the others like them, they see nothing, they understand nothing. They push right ahead with the neoliberal austerity program that has disconnected them from the mass of their own people. But because it's made a lot of money for a minority, and because the minority are the ones who fund these parties, they plow right ahead. This is like being on a train heading right into a stone wall, and all the people pretending none of that is happening. The next update has to do with something being contemplated here in the United States, and I'm talking here about eliminating the estate tax. Let me remind everyone what the estate tax is. If you die in the United States, maybe I should change that. When you die in the United States, you are allowed to leave behind roughly five and a half million dollars that the federal government will not tax. You can leave it to your heirs, your children, anyone you designate. If you're a married couple, you can leave twice that, basically $11 million. What this means is that the overwhelming majority of the American people, we're talking about 99% of the American people, have no federal estate tax to worry about because they don't have $11 million to leave to their children or to anybody else. So when we talk about the estate tax here in the United States, we're talking about a tiny percentage of the people well under 1% of the people have such an estate. So if we put a tax on such an estate, it immediately becomes the most progressive tax in the United States. Which it is. It is a tax that only goes after the richest of the rich. Lest you lose some sleep over the thought that the richest of the rich have to pay a tax. The average percentage paid by these extremely wealthy folks for the estates they leave above 11 million, because they don't have to pay anything on the first 11 million, those are exempt. If you leave more than 11 million, the average percentage in a federal estate tax is 17%. So you keep the entirety of the first 11 million, and you keep 83% of every dollar above that you leave to other people. In other words, the estate tax hits very, very few people and only those most able to pay. However, it does raise for the federal government roughly $23 billion a year. That's a significant amount of money. And to obliterate that tax, which Mr. Trump has said he will do, which the leaders of the Republican Party, both in the House and Senate, have said they intend to do, and that party now controls both houses, that will not only deprive the government of $23 billion it uses to pay for everything else it does, but it will lower a tax on the richest people in the United States and only them, because nobody but them pays this tax currently. It therefore is a major step in making the rich richer because they don't have to pay this tax anymore and the poor poorer, because the government that the poor rely on will have $23 billion less in estate tax revenue than it had before. For a society led by people who claim they're committed to the middle class and to helping average people, the obliteration of the estate tax gives the lie to all of that. This is the act of people who want to serve those who are at the richest end, the millionaires, the multimillionaires. And of course, they will come hat in hand right after they eliminate the estate tax to go to those same people who don't have to pay an estate tax and say, give me, as a contribution to my party, to my re election effort, just a small part of the tax relief I just provided you. And that will be the millions they use. One last thing about the estate tax, the leaders of the Republican Party, like our president, can't directly say, hey, I'm raising money by giving the richest people a tax break. So instead, they talk about the family farm, the little business that has worked all its life to accumulate some money to leave to its children. So we're all supposed to say, oh, we shouldn't take that away from the hard working people. So I looked into it. In 2016, there were exactly 5,200 estates that were subject to the federal estate tax. That's right, 5,200 estates. Out of that 55,05 times 10, 54 farms and small businesses were included out of 5,200 estates. In other words, the small farm, the little business that makes it, is a fantasy. It's a way of building people's sympathy for something they would otherwise never support. In a month of Sundays, I want to finish by talking about monopolies that are in the press again, monopolies that are happening all around us and the impact on us. We should begin to pay some attention to. Over the last week alone, three big monopoly actions took place. Sinclair purchased Tribune. That may not mean much to you, but what it does is it makes Sinclair the largest single owner of local television stations in, in the United States. It's a huge concentration that will allow one board of directors, one group of 12 to 15 people who sit on the board of Sinclair, to control the content of what you see on your local television. For an enormous majority of the American people, it's the concentration of media control. Whatever they decide is fake news you won't see. And whatever they decide you ought to see is what you'll have. No real freedom of choice. The choice will be made for you by a shrinking number of monopolistic corporations. Number two, the high end Coach bag company purchased the equally high end Kate Spade bag company together. Now that will make women's auxiliaries or women's accessories rather is the word I'm looking for a more concentrated industry, allow them to raise prices, to eliminate all kinds of jobs as they combine stores. It's another step to make more money for a small number of people at everybody else's expense. And then the biggest one, which was talked about publicly by none less than Warren Buffett, one of the richest billionaires on the face of the earth, who got angry at his fellow billionaires. He was commenting on the Trump administration's plan to cut corporate profits taxes from 35% to 15%. And he said, you know, I don't believe in that. That's not a smart move. The government needs to do things for people. We have real problems in this society and lowering the corporate income tax is only going to make it harder for the government to solve them. I'm against it. And then he pointed something out that I understand to be a monopoly problem. Here's how it goes, he says. Thirty or 40 years ago, the corporate income tax raised 4% of our GDP. It meant 4% of the wealth of our country was being taxed by the government corporations, whereas today, Mr. Buffett says it's 2%. In other words, the last 30 years have seen the real burden of taxes on corporations fall by half, he said. Over the same time, the cost of medical care in the United States over the exact same period went from 5% of GDP, 5% of the total production of goods and services in our society to 17%. For Mr. Buffett, this is craziness. We are hamstringing our people and our businesses, he says, by making them pay wild amounts of money for medical care. And instead of dealing with that problem, we're saving them money by having them pay lower taxes, hobbling the government, because that's what will happen if they don't pay those corporate taxes, meanwhile doing nothing to enable the government to deal with this absurd overpayment of money for health care. And where does monopoly come in? Well, Mr. Buffett didn't have anything to say about that, but I do. The reason we pay 17% of the total output of goods and services in our society for medical care. And by medical care, I mean four industries. Hospitals, doctors, the producers of drugs and medical devices, and finally the medical insurance companies. Those are the four industries that make up what we ought to call the medical industrial complex. They operate like a coordinated monopoly. They get together, promise not to do each other damage one way or another, officially or unofficially, but by accident or coincidence, we'll never know. But we can suspect. And the end result is we Americans pay more for our medical care for those four industries than any other people in any other advanced industrial country. No other country comes close. Even though the medical outcomes of the United States are mediocre, we're not living as long as we used to. We don't have anywhere near the longevity of other countries or the conditions of well being and health. So we're not doing real well on the outcome. But we pay more than everybody else. That's because there's a monopoly in the hospitals and the doctors and the insurance companies and the drug and device makers. It's either one company what monopoly means, literally, or a small group that somehow managed to coordinate what in economics is called an oligopoly. But this tendency for many companies to become few and for the few to use their market advantage to make profits at our expense, that's going on everywhere, ladies and gentlemen. And it adds to the way in which the the capitalist system as it normally works is not working for the majority of the American people. And just as the folks in Australia have forced a conservative government to do things it never thought it would do before, namely tax big banks, the voters in France and the rest of the working classes in advanced capitalist countries are less and less willing to tolerate and accept a system that works so badly for them. We've come to the end of the first half of Economic Update. Thank you very much for being with us. Let me remind you that we will have in the second half a really important and exciting interview. I'm looking forward as soon as this break is over to introduce you to my guest who I will be talking to. So please stay with us. After a short interlude. We'll be right back.