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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, prospects coming down the road. I'm your host, Richard D. Wolff. I'm a professor of economics most of my life, and my hope is that it prepared me well to offer you these updates on what's happening in our economy. I want to begin today by taking my hat symbolically off to a remarkable group of working people, the public school teachers in the state of West Virginia. They are doing something vitally important for them, even more important for the children whose education they're responsible for. But they're also doing something that has historic meaning for working people in the United States. They have been on strike as we go to press for over a week. All 55 counties in the state of West Virginia, the schools are closed because these public school teachers have decided that enough is enough. They have been sacrificed in terms of how they're teaching and how they're treated. Their children. The public future of this country have been sacrificed to save money while you cut taxes for corporations and the rich. It is a scandal. It's been a scandal and we've all known it. But the teachers of West Virginia are doing something about it. So I want to talk to you briefly about it. They deserve our respect, and most importantly, they deserve to be understood. The public school teachers in West Virginia are denied by the law of that state from collective bargaining. They have no contract with the boards of education and ultimately the state of West Virginia, because the law prohibits there from being the bargaining that produces a contract. They have two or three unions, but they are very small and. And very weak, since the unions can't bargain collectively by law and cannot have a contract by law. So what these teachers have done in every One of the 55 counties of West Virginia is to organize the solidarity of working people. They will not participate in a fraud in an attempt to deny young people the kinds of education that schools are obliged to have, that the future of this country requires them to have, and that the economic realities mandate. They will not go to work without the resources that they ought to be given, not just their own salaries, but also the monies to provide the education children need and deserve. They have organized themselves. The unions may have helped, but it has mostly been the workers themselves who show in their organization what a powerful organized labor movement could be. They didn't do it with the unions as much as they did it on their own. And that's the most important potential transformation of the American labor movement that I've seen in a long time. So hats off to the teachers of the public school system. And from what I can gather, the public school teachers of Oklahoma have, have been watching real closely and are thinking of doing something very similar very soon. The next update I want to talk to you about is what has been in the news so much, the tariffs. The decision by President Trump to impose, at least he says he's going to, as we go to Press, a 25% tariff on steel imports and a 10% tariff on aluminum imports. What is this about? Well, let's first be sure we all understand what a tariff is. It's just a special name for a tax. Basically what a tariff does is say if steel comes into the United States, whatever the price being charged, the importer is going to have to pay 25% more than that price. A tax on the steel that will go to the federal government which is imposing the tax. And the likewise 10% for the aluminum. It's very good news for the producers of steel and aluminum here in the United States. See, it turns out they haven't been doing real well. They can't compete with imported steel, which is either of better quality or lower price or both. And of course, when companies can't compete with, one of the strategies they're free to pursue is to get the government to protect them by making it more expensive to buy the better quality or lower priced imports. It will force buyers here to turn to the American companies and guess what? They can jack up their prices so long as they stay just a little bit below what the imported cost will be with this new tax. And that will allow them to raise prices to. To whom? To all the rest of us. To the companies that buy steel and aluminum in this country. Let me give you the two examples everybody cites. The automobile business in this country buys steel and aluminum. The can business, you know, canned soda, canned beer, all of that, canned vegetables. They use aluminum, etc. Also in large quantities. These companies will be hurt because they're going to have to pay higher prices for the steel and aluminum they buy from the American companies that get protected by the tariff. So now let's look at what this means. The reality, as any trained economist knows, on the one hand, you may get some more jobs in the aluminum and steel business because their prices are going to go up and they're sitting pretty. But you will certainly lose jobs in the companies that buy a now higher priced steel and aluminum because their profits are going to go down and their conditions are going to deteriorate and they're going to lay off workers. No one knows in advance how this will play out. There's good reason to believe that the company's buying the higher priced steel and aluminum will be more negatively affected than the few companies in America that remain that produce steel and aluminum. Certainly Mr. Trump and his advisers don't know how this plays out. And this is the most important thing for me to get across. They don't know, but they don't care. And let me explain why. Why Mr. Trump was elected president in good part because he promised Americans whose economic conditions as we document every week have been deteriorating pretty badly for most of the time since the crash of 2008. He promised them to turn the situation around. We have explained to you over and over again that he cannot do that and he is not doing that. That continues the tax cut he gave to corporations and the rich in late December are just part of that story. Well, the poor President Trump, who can't deliver on the promise to improve the actual conditions of the American mass of people, therefore resorts to symbols, to theater, to to pretend activities that make it look like he's doing what in fact he can't do. So he slaps tariffs, so he ejects immigrants. He does all this stuff to blame other people for the economic foreign immigrants notice foreign trade competitors, foreigners always good to scapegoat foreigners. We when your system and your society are in trouble. So he's doing that. And this is just more symbolism. But Mr. Trump has a second reason for doing this. By putting tariffs on steel and aluminum, he makes those companies depend on him. They're going to have nice profits now if he imposes those tariffs because they can jack up their prices since the cost of importing those things has gone up. They will depend on those tariffs staying in place for their profits. So they're going to become big boosters of Mr. Trump. They have to. They will depend on him. At the same time, the automobile and aluminum can companies are going to be going to work to persuade Mr. Trump to reverse himself and not impose or not continue those tariffs. And headlines indicate that the leading economic adviser of Mr. Trump, Gary Cohn, is busily organizing auto companies and can companies to come to Washington. In other words, Mr. Trump positions himself in the middle and so he can let the car and can companies on the one hand compete with the steel and aluminum companies on the other. Who's going to back him more? Who, who's going to contribute to his reelection campaign, which is already underway? More he can have them bid for him because they will Depend on his decision. He likes to be in that position. It will help him run for office. As usually is the case. Countries that impose tariffs are doing it for domestic reasons. They don't care what the long run international effects are because they won't be in their offices that many more years. That's true for Mr. Trump as well. And as a result, don't look at the details of the international effects because that's not what this is about. This is domestic politics of Mr. Trump in an economic system that is imposing hardship on the mass of people. That's the fundamental cause and function of these tariffs. The next thing that caught my eye this last week was a decision in Germany. I want to talk to you about it. The German government has officially decided to make public transportation in five major cities free. That's right. You can get on a subway or a bus or a, or any other public transportation run by the government and the cost will be nothing. It will be free transportation. Why are they doing this? Two reasons. The first one has to do with saving money. It turns out that when you look at the cost of public transportation and you have all the costs of charging money for it, tickets, ticket takers, people on the transportation to take a ticket, to monitor ticket, to check whether you have the right ticket, these people all have to be paid. This is an enormous cost. There have to be computers to monitor the details. There have to be computers to print the tickets and to catch all of that is saved if you make it free. The issue disappears. And they're discovering that the savings there are are very close to what they take in. It makes no sense. And they could find other important work for those people to do that would make German society better. And they're thinking rationally like that. What an interesting shift of the mentality. But there's a second reason, and this one is very important, because it's having other effects. The rules against air pollution in Europe are strict and unlike many other places, they're actually enforced. And the Germans are falling short of the rules they helped to write and they are being required to adjust. And by making public transportation free, they are giving an enormous incentive for people to leave their private cars at home and to use public transportation for since it's free instead. And that's a major goal here. They've also passed rules that allow German cities now under the law to ban all diesel driven cars. Germany relies on the diesel engine in its automobiles much more than the United States, for example. It's a major part of their private car fleet. Well, the combination of banning diesel cars from operation in these cities, which has the interesting effect of rendering the value of a diesel car in those cities worthless or nearly so. Being accompanied by free public transportation. It's unquestionable where things are going. And I want to make a comment as an economist. Using the private car for transportation has been an economic irrationality for most of the last century. We have done that in order to profit private automobile companies and all the associated industries who have prevented us from having the quantity and the quality of public transport we could otherwise have had. Not because it's good for us, but but because it's good for their profits. You do know, I hope, that the private automobile is the largest cause of air pollution in our society, that the private automobile is one of the largest causes of death and injury every year to the population of countries that rely on the private car. You know that it wastes an enormous amount of energy, fossil fuels particularly. It wastes an enormous amount of material, metals and other things that go into it. Public transportation is safer and cheaper as a way of getting people per mile of where they have to go. It is true. It has been proven a hundred times now under the current conditions of a capitalism spinning out of control. Germany is taking the lead in actually having to do something about that and is therefore questioning the private automobile as the icon of our capitalist system. As usual. At this point I want to remind you that we maintain two websites that I urge you to make use of. Today. I'm going to tell you something about them that is special. I normally mention that you can communicate to us through these websites or rdwolf with two Fs.com and democracyatwork.info that's all one word, democracyatwork.info. these two websites not only allow you to communicate to us, they allow you to follow us on Facebook, Twitter and Instagram. They carry material that will be of interest to you. They are available to you 247 at no charge whatsoever. But before moving on today, I want to tell you briefly about DemocracyAtWork's newest podcasts. Again, democracyatwork.info. we are proud to add to our lineup two new and exciting podcasts. One is called Left out and the other one is called Puerto Rico Forward. Left out, hosted by Paul Sliker, Michael Palmieri and Dante Della Valle, creates in depth conversations with the more interesting political activists, critical economists and organizers. The next episode is with Stephanie Kelton, who has been on this program, a modern monetary theorist who worked closely with the Bernie Sanders campaign. Please go to our website and indeed to most podcast platforms and also on patreon.com leftout to obtain and follow these podcasts and and be sure to follow left out on Twitter eftoutpodcast. The second podcast we're excited to announce is Puerto Rico Forward. It aims to educate listeners about the archipelago's vast economic and political history. It's hosted by Andre Mercado Vazquez of San Juan, Puerto Rico, and the Puerto Rico Forward provides fascinating insights into the legal and economic battles that have made Puerto Rico what it is today. Listen or watch the podcast on our website or again@patreon.com Puerto RicoForward. We really are proud to have these podcasts available to you on our website. Next update has to do with the United Kingdom the statistics are now out and the decade from 2020 to 2015 has now gone down the history books as the worst period of time for the declining standard of living of British UK households in 50 years. Of course it helps explain why angry workers at such a lost decade, a deprived decade when the rich got richer in Britain and everybody else had these results, that they were angry that often this was managed by a Labour Party government, Tony Blair and what he represents. And of course it explains in part why angry British workers voted for Brexit. Of course, they now understand that voting to get out of the European Union is not a way to deal. That wasn't their problem being in or out of the union. Their problem is an economic system geared to take care of of a minority at the expense of a majority. To give you just one idea, a statistic that caught my that the local councils. It's an important part of British government. Local councils closed more than 500 children's centers since 2010. Government funding for the children's center was cut from 1.7 billion in 2010 to less than 10, $850 million now. That's a 50% cut in the program for children. This is part of the decline of capitalism in Western Europe, North America. As capitalism moves its center of activity and dynamism eastward into Asia and as that shrinks the well being of the capitalist economies of North America and Western Europe, there's a scramble in those societies. We who's going to lose? Who's going to take it on the chin? Who's going to have to adjust downward as capitalism finds more profits in Asia than it can squeeze out of Europe and North America? And in each of the societies it's organized to put the burden on those who can least fight back the middle class, the working class, the poor. And that's what's happening in England. And you can see from these numbers what kind of effects it's having. And of course it is making the British people begin to question and to begin to find meaning in a critical perspective on British capitalism, which at this point is the strong suit of Jeremy Corbyn and his wing of the Labour Party there. Politics in Europe again take my attention. Iceland has a new leader. Prime Minister Catherine Jakobs Doter, 42 year old woman, is the fourth Prime Minister in two years. I mention this because of who she is. She isthis is her own self definition, a socialist, feminist and an environmentalist. She leads the left Green movement and she's in a coalition. But here's the surprise with two conservative parties that have traditionally run Iceland but can't do it anymore because the mass of the Icelandic people will not support the traditional old parties because they're hooked up with the traditional old capitalism that has made such a mess of the world in the last 10 years and especially of Iceland. Her famous statement the other day was, quote, people don't trust politicians. Well, she got that part right. Question is whether she can carry through and understand that the problem of Iceland is its capitalist system and actually chart a course to get beyond it. And much the same I can say about the recent election in Italy where once again the old traditional parties were thrown out, were voted down new parties as the Italian people explore. And even some old parties, yes indeed they the old Berlusconi with his dye blackened hair to try to pretend he isn't the old political machine that he once was. They too are discovering the British people, the French people, the German people, they're not voting for the traditional. The Germans did the same recently in the two old parties, Merkel and the Socialist party of Germany getting together to run a combined government. Because together they barely get 50% of the vote when once they rule the roost with nobody challenging them. The middle of politics that supported classical capitalism since World War II is disintegrating as the capitalism moves east and leaves North America and Western Europe in a declining situation. My next update has to do with the return of something we thought we had done away with decades ago. I'm talking about debtors prison over the years and we're talking centuries. When people have been unable to pay back debts, the angry creditors often put them in jail. The debtors pointed out that if I'm in jail I certainly will not be able to pay off my debts. It's crazy. For you to put me in jail. Let's work out a deal where I can try to continue working and figure out some way to pay at least part of the debt. But. But putting me in jail is shooting yourself in the foot. Most people figured that out, but of course the lenders are still angry. Why am I telling you this? In the United States today? Listen to these statistics, folks. One in three adults has a debt that has been turned over to a private collection agency. And here's what those clever folks have figured out. You can arrange in the courts not to put a person in debt prison because he or she has a debt. But here's what you can do. You can use the courts to force an appearance for that person in court on such and such a day to deal with their debt. And if they don't show up, then they have a probability of being in contempt of court. And for that they can be put in jail. So by this little maneuver, the collection agencies are able to threaten millions of Americans. You better pay or else we're going to do things that land you in jail, which is what the whole debtor prison was all about anyway. This, of course, has hurt poor people more than others, people of color more than whites. The usual story of kicking the can down in the population and hurting those who can tolerate it least. Well, what's the solution in this system? Not much of one. Because you might say, well, if we tighten the laws, you can't use this abuse. Well, then the loans won't be made and these people need these loans. The major category of loans that fall into this dilemma are what called payday loans. When you borrow money before getting paid, promising the lender that you'll use your pay next week, next month to pay him or her back. If you deny these people loans, you again make their lives difficult. The fundamental problem, we're not paying the mass of people the kinds of salaries that would make them no longer need to pay payday loans, which often raise interest in the neighborhood of 400% a year. This whole scandal has to do with a system that, that imposes unlivable salaries and wages on a huge portion of its population. That's the problem. If you don't deal with that problem, you're endlessly moving people around from one abuse they suffer as a result of being in debt to the next one. And you're making lenders have the incentive to figure their way around the laws and limits that you might otherwise impose. The last item we have time for has to do with what happened to rich Universities Endowments. Endowment is the name given by universities lucky enough to have some money, if they can put that money aside, invest it in stocks and bonds, and make interest off of that as a way to build up their wealth beyond what they would otherwise have to get from the students who, who come there and pay fees. I was interested to discover that over the last 10 years, a very difficult decade for American working people, the universities with endowments, that is the richest ones, most public universities have no endowments and even most private universities don't have much of one. But I wanted you to know that mit, which was one of the best, did the following. With its wealth, it rose 7.6% per year. Year, folks. That means over the last 10 years, its income from investments doubled. Harvard, which did way worse than most of them, did 4.4% a year. That's a roughly 50% increase over the last 10 years. Did your income go up by 50% like poor Harvard's? Did it go up by 100% like MIT's? My guess is it didn't go anywhere near that. The mass of people have had a harder and harder time. But the richest universities that have money set aside, like the richest people everywhere else in this country did real well. That's why the inequality problem is so bad and getting worse. We've come to the end of the first half of this Economic Update. Thank you very much for being with us and I urge you to stay with us. After a short interlude, we'll be back with Dr. Harriet Frad because it's the beginning of the month for us, and so she will be here to discuss the economics and the psychology of families in our economic system. I'll be right back. Welcome back, friends. Greetings to the second half of Economic Update. It is my pleasure at the beginning of each month to welcome Dr. Harriot Fraad to the microphones and to the cameras in order to explore the crucial intersection between economics and psychology, between what is happening in the economic parts of our lives and what is happening in the innermost and intimate parts of our lives. Dr. Harriet Fraad, as I think you by now probably know, is a mental health counselor and hypnotherapist in private practice in New York City. Her work explores the intersection of American personal, economic and political life. Her most recent articles have appeared in Alternate and the book Knowledge, Class and Marxism without guarantees, published in 2018. She appears regularly every month on this show and also on other television shows, most recently redacted Tonight with lee Camp on RTTV. Her work can be found at her website harrietfraud.com and I'll spell that for you. H A R R I E T F R a a d harrietfraud.com so it is really with great pleasure that I welcome to this program again, Dr. Harriet Fraad.