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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 coming down the road to confront us in the near and distant futures. I'm your host, Richard Wolff. I've been a professor of economics all my adult life and currently I teach at the new school year. I wanted to begin today's program by talking for a moment about a historic event with historically important economic consequences. You might have thought I was about to speak about 911 and what happened here in the United States and the economic consequences. I am, but I'm just as interested in another memorial. But before I get to it, what were the economic consequences of 911 in the United States? Well, there were quite a. The explosion of government spending on security, homeland security of all kinds that hadn't happened before, putting all kinds of new strains on the budget. A ratcheting up of military preparedness and military activity around the world along the idea of combating terrorism, which is a complicated thing because we don't know exactly what it is, where it is, when it is. And, and so it kind of means you have to be armed for everything all the time. And that for sure is expensive. And the government pays that bill and so ultimately so do the people. It also gave a tremendous boost to the security industry. All the companies that make arms for the government, bombs for the government, drones for the government, and all the companies that produce things for a security obsessed population, whether it be in the backyard of your house or in your business, in your office, and so on. Security became one of the fastest growing job categories in the United States as most major cities began to hire all kinds of people who stand near the entrance of the building, requiring all kinds of procedures before they let people in, and so on. So it did have important economic consequences. But there's another 911 that wasn't marked here in the United States, and I want to comment on that too. In 1973, that was the time when the president of Chile, Salvatore Allende, was assassinated. An assassination of a political leader perfectly legitimately elected earlier to be the new leader of Chile. Chile had been going through quite a change. It had moved to the left among Latin American countries, become much more progressive in terms of its social programs. This had led to a backlash which took the form of an engagement with the American economics profession, particularly one Milton Friedman at the University of Chicago, who began a program some earlier years training especially Chilean economists who went back and argued that Chile shouldn't go in the direction that the people voted for, but in a completely different conservative. We would nowadays call it neoliberal direction. Mr. Friedman and his supporters had their chance when Mr. Allende was assassinated, and there's plenty of evidence ever since that the United States, Henry Kissinger in particular, had more than a little to do with all of those events, although the details, of course, will remain secret, probably forever. Did it have an effect? Yes, it did. It deflected, it controlled, it stopped a leftward direction among Latin American countries for decades. It took several decades before that reasserted itself, as it did in the 1980s and 90s, slowly, and then in the new century, quite more quickly. That is still going on, although it has suffered some setbacks in Brazil and elsewhere. But it had enormous effects on the economic development of Latin America, most of which would have to be counted as negative. Important Historical Events with important economic consequences before jumping into our next updates, I want to remind you that everything you hear or see on this program is also available on our websites, where all of these programs are archived. As I've mentioned in the past, we began in March of 2011. We have produced a unique program every week since without one failure. And all those programs are archived and available if you're ever interested, on our rdwolff with two Fs.com and democracyatwork.info that's all one word, democracyatwork.info both of those websites give you ways to communicate to us, to tell us what you like and don't like, what you would like us to do on this program. Every single one. Both of those websites also provide you with ways to sponsor our programs to get more information, to get us on your Twitter or Facebook feeds. You can follow us that way and get continuous contact from us with everything new that we put up there. The websites are available 24 7, no charge. Of course, all that material updated continuously is there for your use. We ask you to partner with us. If these programs are interesting, share them. That would be the best partnership we can imagine with all of you. I will come back with a few words later. Let's jump right in. Well, over the last few days there has been a great deal of celebration that in the year 2014-2015 we had an improvement in the average or median incomes of the American people. And indeed that is cause for celebration. But the celebration has become absurd because it is unaware. And it's hard for me to say that word because it's hard for me to believe that the spokesmen and Women are indeed unaware of what I'm about to tell you, that the improvement over the last year doesn't solve the problem of what has happened over the last 20 years. And the story of the last 20 years is much more powerful than what happened in just one of them. Let me explain the big number of the last few days. Median household income. Let's be clear what that means. The median household income means the level of income such that 50% of American households do better and 50% do less. The median is a number we calculate and use because it gives you a sense of where things are going. So there was an improvement over the last year. 2015 was better than 2014. But 2015 might have been better than 2014, but it wasn't as good as 2007 and it wasn't as good as 1997. In other words, over the last 20 years, we have seen a decline in the median household income. Let me give you the numbers, not that you need to remember them, but so it's clear. Median household income calculated by the United states government in 1997, roughly 20 years ago, 57,900. That's the $57,000. Nine hundred ten years later, in 2007, the median income had dropped to 57,000. Excuse me, 400. All right, let me repeat that to be clear. From 57,900 ten years later, 57,400. And what is it in this good year of 2015? 56,600. In other words, 20 years of the declining income of the American people. No wonder folks are upset. No wonder the population is angry and bitter at what's happening to them. And one year's improvement. However, what much we celebrate, it has to be put in the context of a 20 year decline. And what do I mean by context? Let's be clear. Over the last 20 years, the output of the American economy has grown dramatically. Wow. The productivity of American workers has increased dramatically. Well, let's see now. If we've produced a lot more wealth and we've become a lot more productive, how do you account for the fact that the median income of a household has declined all those 20 years? And the answer is, is simple. All that output, all that growth in productivity and wealth went to the top 5% of the American households. That's why everybody else is doing poorly. And the top 5% are laughing all the way to the bank. Normally, I would stop at this point, the point having been made, I hope, by the statistics released by the government. But I can go one better today. And I want to do that, since the opportunities I have to celebrate the Wall Street Journal are few and far between, given the political and ideological orientation of that newspaper. But I want to give credit where it's due. On the 13th of September, that's just a few days ago, the Wall Street Journal carried an article written by Josh Zumbrun. I hope I'm pronouncing his name real well. I'm going to spell it so those of you who might want to pursue this can do so. Z U M B R U n Josh Zumbrun, September 13, Wall Street Journal and there his article is entitled US Poverty and Income Inequality in Nine Charts. And there they are, if you're interested. All that I have just told you is beautifully and clearly laid out in those charts by the Wall Street Journal showing that poverty is a serious problem in the United States that has gotten worse over the last 20 years, that inequality has gotten much worse even than the story of household income. No wonder Bernie Sanders captured the imagination of millions. No wonder Mr. Trump is able to do the same from a different perspective. The economics of the United States are shaking this society to its foundations. Let me get at this in another way. Recently there have been a number of studies that have talked about maternal and paternal leave policies. What does that mean? Governments around the world pass laws that impose on employers the obligation to do something for their workers. When those workers have a new child, they give birth to a baby or they adopt a child. And the 35 countries whose laws are reviewed by the OECD, a very important and prestigious international organization that I cite often, it's the Organization for Economic Cooperation and Development. They keep track of the 35 mostly wealthier countries in the world. How do we look? We here in the United States, when, when it comes to family leave, parents and children, the answer is out of 35, we rank the worst. Let me do that again. Out of 1 to 35, we are number 35, the United States, because basically we don't mandate we don't mandate maternal, paternal, mother and father getting a leave for a few weeks, a few months, to take care of newborn children or newly adopted children. Every other country surveyed, which includes poor countries like Slovenia and Mexico and so on, do better than we do. Long overdue. This shameful reality of a wealthy country not providing what its fellow countries, most of whom are much less wealthy, see fit to do. This is so grotesque that both Mrs. Clinton and Mr. Trump, the two major party candidates, have said something in recent weeks about it. They are both in favor of providing some paid leave for new parents. But here again, like with that statistic about rising income. But before you applaud, Hear me out. Mr. Trump has proposed six weeks of paid leave for a new child. Mrs. Clinton has proposed 12 weeks. What is the average for the 35 countries followed by the OECD? What's the average amount of paid weeks those countries give out? Ready 54 weeks. That's right. We mandate none. The other countries mandate an average of 54. And our pioneering major candidates can come up with the number 6 and 12. It's hard for me to take this seriously. Countries like Estonia, Finland, Hungary, Slovakia, they're all ahead of us. They always have been for many, many years, and they continue to here in the United States. The United States government spends less on child care and preschool than in most developed countries. This is a story from the New York Times on 15 September 2016. When you add up federal, state and local government spending on child care and preschool, it's less than 0.4% of the gross product of the United States in France, Britain and New Zealand. The New York Times reports it's three to five times greater. What possible excuse can be made for this next economic update? The Kaiser foundation is a famous foundation here in the United States. The Kaiser Family foundation is its formal name and it has just released a survey about health care costs here in the United States. And it has many dimensions that I could spend time on if I had more, but there's one that I wanted to bring to your attention. Commentators have been struck in recent years that the rate of growth of spending on health care has slowed dramatically from what it had been until recently. There's a debate about what the reasons are, but for me, the most persuasive argument is that economic pinching of the mass of people, the very thing we've discussed a few moments ago, 20 year declining household income explains, I think, quite well why families increasingly postpone avoid going to the doctor because they don't have the money. That the decline in spending is not because we're more efficient in providing medical care, it's because more and more people afford it. That's the honest truth. And so they're not going. But there's a greater and more important statistic that the Kaiser Family foundation survey resulted. While businesses are not spending as much for their medical insurance because working people are not going to the doctor the way they once did, that has not stopped employers, public and private, from shifting more and more of the cost of medical insurance off of themselves and onto the workers. Here is A stunning statistic from the Kaiser Family foundation between 2006 and 2016, that is over the last 10 years, the average annual deductible for a single person's coverage among the workers who were covered went from $500 per worker per year. That's the part they have to pay. Deductible means before the insurance kicks in, you have to pay that amount. In 2006, the average was $500. In 2016, the average $1500. You heard me right. The amount that the worker has to pay has tripled, even though the rate of growth of what the employer who hires that worker has to pay for the insurance hasn't gone up very much at all. So the cost of health care not rising as fast because people don't go. And when people go, they have to pay much more of the cost of their medical care than they did before. That is as profound a burden on the American working class of people as anything else. So when politicians, and most recently it was Bill Clinton campaigning around the country telling everybody what a wonderful thing it was that the number of uninsured Americans, that's people who have no health insurance at all, is down to 9%. And heaven knows, while that is not 100% as it should be, it's better than it was. This is a way of focusing on one of the few statistics that's a little better to distract attention from the statistic that is stunning across the administration of Barack Obama. The average worker covered by insurance saw his or her deductible, the part they have to pay, go from an average of $500 a year to $1500 a year. What comment could I make? The next update comes with a groan. Why? Because you hear this so often. So I don't tell you about it very often, but every now and then it's so gross that it needs a mention. This one has to do with a man named Jose Manuel Pa Barroso. He recently retired from being the head of the European Commission. That's basically the institution that governs all of Europe, an economic area that has more population and produces more wealth each year than does the United States. Okay, he quit that job. And by the way, while he was the head of the European Commission, that was the time when. When they imposed austerity on Europe. This program in which the banks bring us to the edge of disaster in 2008, the government is asked to bail them out. It does. It borrows a lot of money to do that. And then it says to the mass of people, we borrowed a lot of money to bail out the banks. You're going to have to make good the economic situation, help us to lower our deficits because they went up so much to bail out the banks so that the mass of people have less in the government services, have higher taxes to pay to reimburse the government for all it's spent to bail out the banks. As if that Weren't bad enough, Mr. Barroso was also in charge of the European government when it savaged the Greek economy in recent times, something that we have documented on this program repeatedly. So this is a man who is not well beloved, by the way. Before he became head of the European Commission, he was the former Portuguese prime minister, powerful European politician. Why am I telling you all this? Well, this last week it was announced that he's taking a new job. And I wanted to share with you what Jose Manuel Barroso's new job is. He took a job as a banker with Goldman Sachs. Uh oh. This is another example of musical chairs. Musical chairs being top levels of government and top levels of banks and other multinational corporations. You're one. You wear one hat for a few years, then you wear another. You behave nicely while you're the government supposedly monitoring and controlling these companies. If you do it nicely, they'll hire you at astronomical salaries as soon as your government job is done. 140,000 people have already signed petitions in Europe denouncing this charade. The French president, Francois Hollande, sorry, said the this may be legally possible, but it is morally unacceptable. I can't add to that. I can only say he's not the first, he's not the last. We see that all the time. And it tells you that the problem of our modern economy is not a debate between the government, Is it the government? Is it big business? Because the difference between those two has long since been erased. These are the same people. In fact, it's a little hard to keep track of which particular hat they're wearing, nor does it matter. Last item that I have time for today is a response to something some of you have sent in. You wanted me to talk about Social Security because you've heard that there are attacks on Social Security. You're right. And that there are criticisms of Social Security that somehow we don't need it, or we don't need so much of it, or it isn't that important, or we would be better off without it, et cetera. So the question that many of you asked was just how many Americans get Social Security, particularly people over 65, who are the major group of Beneficiaries in America. How important is it to them? What difference would it make if we didn't have it? So here's what I did. I went to a research group in Washington, D.C. that has helped me often. I have been very appreciative of the work they do. They're called the center on Budget and Policy Priorities. You can find out all about them by going to CBPP.org CBPP center for Budget and Policy Priorities. Here's what I learned when I inquired about the Americans Depending on Social Security. Here we go. Simple statistics summarized what percentage of the American people rely on Social Security for more than 50% of their annual income. Let me repeat that. How many Americans over 65, elderly folks, how many of them need Social Security for at least half or more of what they live on? The answer 65%. Nearly 2/3 of our elderly, that's people over 65, the vast majority of whom have given a lifetime of labor to this economy, have worked, raised children, been members of their communities and want to have a retirement that is safe, that is comfortable. You took away, if you did in this country, Social Security from the mass of elderly people, 2/3 of them would see their income drop by half or more. Let me go even further. I ask the question, how many Americans rely on Social Security, which is very little, 11, $12,000 a year is what the average is very hard to live on. Puts you right in the horror of poverty in America. If you go how many Americans rely on Social Security? Poverty level income for 100% of their income ready 1/4 25% of all Americans rely on Social Security for everything. What in the world would happen to them? What kind of homelessness, what kind of poverty, what kind of begging would we have if we took away Social Security from 25% of all Americans? And for Hispanic Americans, that number is over 40%. Rely altogether 100% on Social Security. Attacking Social Security is a level of cruelty and insensitivity beyond words. Folks, we've come to the end of the first half of today's economic update. Please stay with us. We will be back in a very short time with what I believe you will find to be an extraordinarily important and interesting interview on worker co ops. Those that were formed in Argentina, those that are forming in Cuba. The whole phenomena by an expert, Peter Ranis, whom I will introduce to you immediately after the break. Stay with us.