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Welcome, friends, to another edition of Economic Update. It's a weekly program devoted to the economic dimensions of our lives. Jobs, debts, incomes, crises of all kinds that beset the capitalist economy that. That we live in and live under and live with. I'm your host, Richard Wolff. I've been a professor of economics all my adult life, and my hope is that it trained me to be able to present to you an understandable analysis of what's been going on in the economy we depend on. I want to begin today's program with a recognition that it is the 50th anniversary of the death of Martin Luther King, a man who devoted himself, as we all know, to doing something to correct one of the gravest injustices of our country's life and history. Racism in all its forms and all its consequences. Martin Luther King learned in the course of his efforts to deal with that problem that. That it was inextricably intertwined with another problem. And that is an economic problem. And that's why I'm talking about it. The problem of having a mass of people, white and black, in a subordinated position as workers confronted by the enormous wealth and enormous power of a tiny minority of people that own and direct the enterprises upon which we all depend for. For the output they generate and the jobs that we need. And Martin Luther King 50 years ago made the ultimate sacrifice of his life to pursue that connection. That's why he had gone to Memphis. That's why he had worked with the garbage drivers and the garbage picker uppers in. In that city to correct a problem that afflicted them both as African Americans and as workers. I think if he were here with us today, he would recognize what I have to recognize, which is a great deal of what Martin Luther King sought to achieve remains to be done, because this country has been unable and unwilling, under the leadership that has governed it, to really address the inequality and the injustice that has accumulated across our history in an effective way. Which is why the wealth, average wealth of African Americans is lower today than it was 20 years ago. A statement that is stunning in the history of modern capitalism and attests more loudly than anything else I can say to a problem that remains central and foremost to this country's life. The first update I want to share with you today has to do with things going on in France. Masses of people, hundreds of thousands, perhaps millions, have been in the streets of France, not just Paris, but in all the cities and towns across the country. Vast demonstrations against the government, against the presidency of Emmanuel Macron. This man who once was a socialist politician in his country has decided that the French economy needs help. No one disagrees on that. That the French economy needs to be given by boosting and support to compete effectively in the world. And nobody much disagrees with that either. But here comes where the disagreement arises. How do you do that? And his decision is to bring you'll love this flexibility to the labor market. Let's look at what those fancy words mean. He has proposed labor reforms. What they basically amount to is to allow employers to fire employees pretty much at will. Up until now, the working class of France has imposed rigorous limits. Employer cannot fire employee without providing reasons, can be brought to court if those reasons are not acceptable, and will have to pay big fines if it was found that the firing of an employee was unjustified. These are rights of the laboring people, the vast majority. Mr. Macron wants to cut them back. He wants to make it easier for employers to hire and to fire. And there are a whole host of other things like that he wants to do because this will make business more profitable and that will help the French economy. He says masses of people are in the streets to say no, no, no, no, no. And before I tell you what the alternative they propose is, let's first face what I've just said to you. Because similar things have been going on for years in the United States. But there are no masses of people in the streets to fight them, to fight the damaging of working people 10 different ways. We don't do that in this country. Nothing like the French. And we ought to face what that means, what participation in democracy means, what the effect of all of this means. Let me remind you what the French working class has achieved. They have a work week much shorter than here in the United States. They have a completely nationalized health insurance program that gives everybody complete health insurance from the day they're born to the day they die. They are given by law five weeks of paid vacation for every working person that has to be paid by their employer. They have a system of daycare provision for parents that has no rival in the world. I could go on, but you get the picture. The decision by Mr. Macron is an attack on the working class. And let me explain to you why. Because to reinvigorate the French economy, there are other means than attacking the the benefits of the majority of people. Let me give you just a few. If you didn't allow the highest paid people in France to walk away with tens of millions of dollars, that money would be available to do all Kinds of things in the economy that would help the economy. Improve technical education, provide more people with access to college. Buy more modern equipment for your production. Here's another way to boost the French. Lower the prices of French goods in the markets of the world. People will buy more of them. And how might you do that? By lowering the salaries of the people at the top who take a disproportionate amount. And if you didn't have to pay them the big salaries, just say 30 times what you pay an average worker rather than 300, you could make savings on the prices of goods and that would make French goods more competitive. You get the picture. There are a lot of ways to boost an economy. Whacking the mass of people after they've won certain benefits that shape their lives doesn't have to be the way to go. And the French people are letting the French government know. No business as usual. Schools closed. The rail system closed. Students have walked out of school. Grocery store clerks have shut down the stores. You get the picture. It's almost May 2018. Fifty years ago was something called May 68, when workers and students didn't just close down this in that industry the way they're doing it today, they closed down France. It's springtime and capitalism is shaking. Let me turn to another economic update, very brief and scary, but I have to tell you about it. The crash in 2008, the crash that reverberated to this day as capitalism's second worst breakdown in 75 years. We're still only number two to the Great Depression of the 1930s that was brought on by the collapse of financial markets. This is a fancy way of saying the collapse of mortgages. People had been given mortgages who couldn't afford them, whose salaries weren't big enough to sustain them. Those mortgages were then bundled together in something called mortgage backed securities that were sold to people who invested in them, who invested in them, not understanding that the people who had taken out the mortgages which they now owned wouldn't be able to pay the monthly mortgage pretty soon. And that all blew up in 2008. And for a few years after that. Mortgages were not bundled into securities, at least not the mortgages of people who couldn't pay something called subprime mortgages. Mortgages. Mortgages taken out by people whose credit wasn't good because their income and their family circumstances made them poor bets to be able to own their own home. The last two years has seen a sudden resurgence. Call this capitalism that can never learn. And they're doing it again. The growth in subprime mortgage backed securities being marketed in the world has soared in the last two years, suggesting that memories don't go back very far. We're heading down the same disastrous road that we have been before. Another statistic that came out this last in more than half the states of the United States, students now pay more than the government does for tuition. And at public universities ever since the end of World War II, the importance of educating young people in America, the importance to them, to their families, to their communities and to our economy. Because as you all, I hope, know, the most important resource for the future of the economy of the United States in the larger world economy hinges on on the quality and the quantity of our trained young people. And the number one institution that trains young people in the United States are public colleges and universities. Over three quarters of all graduates of college and university go to public colleges and universities. And that was considered a social benefit, you know, like a public park or like anything else the government does for usthe roads, the harbors, the securityall of it. We benefit all, we share the cost. That was thought to include higher education just like it already includes elementary and high school and so on. But we're pulling back. In this capitalist country, the rich don't want to pay anymore, so, so they've got the politicians cutting their taxes and to get away with it, cutting everybody else's just a little so they don't pay attention, so there isn't the money. And so we're not going to support our college students. We need them more than ever. Our future depends on them. But in this strange capitalism, we are shooting ourselves in the foot. So the first time in half the states students have to come up with their own money to go to college more than the government kicks in to help them. Crazy behavior, self destructive behavior. And like with all self destructive behavior, you have to ask what leads people to do such a thing to themselves? In the end, a narrow mentality of saving my money and holding on at the expense expense of the society. Which is going to punish you for that? Sad, but it's in our society. Will young people learning perhaps from the French do something about this? Well, teachers are I want to shout out in my next update, I have celebrated what was accomplished by the West Virginia teachers few weeks ago when they pulled off a fantastic strike across every single county of the state of West Virginia, won themselves a 5% wage increase and no messing around with their health benefits. And boy was the lesson learned over the last week or two in comes the Oklahoma, Arizona, Kentucky. If I had more time, I'd go through the basic details on each of those three states. But those very different states, Oklahoma, Kentucky, Arizona, have one thing in common. Their teachers are not going to be told no. They're making the demands long deferred, that they get the respect as educators that they deserve and that they can do their job to educate the young people even if the police political leadership focused on tax cuts doesn't care anymore. Serving the big businesses whose interests are abroad, whose interests are somewhere else, and who don't care anymore about the mess they leave behind as they move their business somewhere else. I want to turn next to a wonderful piece of research that was actually done by the cbpp, the center for Budget and Policy Priority. If you're interested, they do a wonderful chart I just want to report to you about. It's a chart on poverty in various countries, but it does something unusual. It doesn't just measure how much income people earn and then decide whether you're poor or not. It looks at how much you earn, but then it asks how much of that do you pay away in taxes and how much in addition to that do you get in the way of social programs, rent, vouchers, food stamps, whatever it is, in order to get a sense of after taxes and what are called transfers, money from the government to people, how do you shape up in terms of the poor poverty? And in every country that they looked at, these folks, the poverty rate before you took into account taxes and transfers was much higher than what it was when you took them into account. Because after all, the point of the transfers is to reduce poverty, to alleviate poverty. So let me tell you about these countries. And in all the cases, these are countries that are considered high, high income, industrial developed countries. The country that takes care of its poor people, you might say best, is Denmark. There it is again. Their poverty rate, after you take into account all the transfers, 6%, that starts going up. France, it's 8%, still pretty good. Ireland, 9%. Okay, not so great. United Kingdom, 11%. But then we get to the highest percent, the country that accomplishes the least by means of its tax and transfer system to alleviate poverty, you guessed it, the United States, 18%. One out of five people in the United States is qualified as poor. That means a household income that is half the national median income. It's the bottom quarter of the population. Basically one out of four, maybe one out of five American families remains impoverished. Even after all of the food stamps, all of the vouchers for Rent all of the help that they get, we still rank at the bottom. Wow. Before I go on, I want to remind you, as I always do, that we maintain two websites where all of this kind of information and much more is available to you. The first one is democracyatwork. That's all one word, democracyatwork.info and. And the second one is rdwolf with two f's. Com. You can follow us on Facebook, Twitter and Instagram. You can communicate to us what you like and don't like about this program. And basically you can partner with us, use what we do, the work we do and that we assemble for you to share with your friends, your neighbors, your relatives, your co workers, which is why we do this program, make use of these two websites. They're available to you 247 at no charge. And for those of you that are listening to the radio show, if you're interested in seeing this as a television show, we urge you to visit patreon.com p a t r e o n patreon.com economicupdate the name of the show and you can see this program as a television program. And I want to take this opportunity to thank the whole Patreon community that we've developed to support this program. Your interest, your support is absolutely crucial to us and we appreciate it. I also want to remind you that we have our newest podcast about Puerto Rico Forward that you can find available on Apple Podcasts and Google Play as well. In the remaining time we have, I want to bring to your attention a very remarkable researcher whose work I urge you to look at. Her name is Virginie, the French version of Virginia and her last name is Perrotin. I'll spell it for you. P E R O T I N Virginie Pierrotin. She is a professor in the business school at Leeds University in Great Britain and she has written many books and articles and research reports that I want to bring to your attention. Because she studies worker co ops and in particular she studies what the difference is to a community that has worker co ops as the way they've organized businesses rather than top down hierarchical capitalist corporations. She looks and competes these two kinds of corporations and what she finds and what she documents in real systematic way is the superior benefits to the community, the greater efficiency and the greater human satisfaction people derive from democratically organized enterprises. If you want to see that research done, go find the work of Virginie P E R O T I N Business school professor at Leeds University in Britain. I've left some time to give you this last update because it teaches you so much about the American economy. This last week, President Trump proudly announced a new trade agreement with the country of South Korea, an important trading partner. And one of the items in that agreement struck me, and I want to tell you why. It has to do with tariffs on trucks. It turns out, for those of you who may not know, that the United States has imposed tariffs on trucks imported into the United States for the last half of century, since 1963, to be precise. The tax is enormous. This tariff, 25%. So whatever it costs to produce a truck in any other part of the world and bring it to America, we have to pay that price that it costs to produce the truck with a profit to the company, plus 25% tax or tariff on on it. This is a way to do what? It's a gift to the American truck producer because it makes foreign competition too expensive. They can't compete because we have to pay an extra 25% for a truck that comes in. That's 25%. We don't have to pay if the truck we buy is made here in the United States. The idea that Mr. Trump pushes and people like him, that we are only now threatening tariffs because other people discriminate against us, is nonsense. We, like every other country, manipulates foreign trade as much as we can get away with. We are not some innocent lamb that has been victimized. That's a silly fakery that we are adults and shouldn't indulge in anymore. So I want to tell you about trucks because it's so important. Here we go. Trucks in the United states account for 15% of all vehicles sold. Okay, the three best selling vehicles in the year 2017 were the the Ford F series truck number one, the Chevy Silverado number two, and the Ram Chrysler car number three. They were the most profitable sources of money for the automobile companies. And you know why? Because they're protected by a tariff. They could jack up the prices of their trucks because there was no danger to that. Cheaper, better trucks could come in because they were held out, because they had to pay an import duty, a tariff of 25%. You want to know why? Their advertisers filled the air in this country over the last 50 years. Every TV show imaginable with a cowboy getting off the back of his truck or putting a horse on it or otherwise looking very manly. We advertised trucks to the American people who bought them like it's going out of style, for one, because of the profits that were involved in trucks. And those were Only there because we put a tariff wall to prevent others. We made other truck companies come here into the United States to produce their trucks here so they wouldn't have to pay that. And we think that's created jobs in it did for a few. But the profits from all of that are in the hands of those foreign companies who can and do use them elsewhere in the world. What I want everyone to understand is something as American as the truck is a protected device. We have paid more for trucks produced in America than we should have and than we needed to. We could have had trucks much more cheaply if we would have allowed foreign truck companies to compete on a level playing field with Americans. On 4th of July, we have speeches about competition and how our leaders believe in competition. Don't be fooled. The American truck culture, which, by the way, has a lot to do with guzzling fuel because the fuel biting and eating of a truck is much worse than of a car. Remember it. The pollution we have, the use of fossil fuels we have, has been worsened by the truck, which has made profits for the few companies at the expense of the prices we all have to pay. They got protected. You got ripped off.