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Welcome, friends, to another edition of Economic Update. I'm your host, Richard Wolff. I want to begin today with something that's becoming a global movement and deserves a lot more attention than it's getting. I'm referring to what began in France as. As the Gilet Jaune in French, or the Yellow Vest movement. It has spread across France now for nine continuous weeks. It involves hundreds of cities across France, from Paris to the smallest towns in the country. It is people of all persuasions and from all walks of life who've had it with years and years of a government they believe favors the rich and leaves the middle and the poor, the 99%, to pick up the pieces as it takes care of those who need it least. It began in France, as I said, been going for nine weeks. It has spread from there to Belgium to the Netherlands. And last week it came in a big way to the United Kingdom as several of the French activists were crossed the British Channel and joined with British counterparts to begin a yellow vest movement in Britain too. Now, it began as an opposition to austerity policies, those activities of governments around the world after the crash of capitalism in 2008 and after bailing out the biggest banks and biggest corporations, it turned out that big the government had spent so much money and borrowed so much money to help the banks and corporations that it didn't have any money left for the mass of people and began cutting governmental programs, governmental employment, et cetera. In other words, the mass of people were made to pay for the costs of a capitalism that fell apart in 2008 and nine, and the bailouts that the leading capitalists were able to get. But this protest against austerity very quickly broadened. It went beyond austerity to be a protest at the whole economic arrangements of the last 10, 20 years. It's now critical of Macron, the President of France. It's critical of lots of economic policies, and it has already won amazing concessions from the French government. A rise in the minimum wage, getting rid of a tax on fuel that started it all. Changing the pension laws to help masses of people, not the big banks that operate the pensions, etc. But I want to show that this Yellow Vest movement has an other, bigger historical role. Europe had unified at the end of the last century, around the year 2000, and it did so because it doesn't want to have yet another World War. The 20th century saw two world wars centered in Europe. The catastrophic losses were such that people wanted a unity for peace. But it was changed that European Union to serve big corporations to basically allow them to have all of Europe to dominate and and profit from. It was a European Union for the rich and for the biggest businesses. And the mass of people were hurt and sacrificed. That's why there's this populism of criticism. That's why over the last couple of days a political party in Germany has defined its program as Degzit, the exit of Germany. Deutschland in their language like Brexit, the exit of Britain. The yellow vest movement is a demand not only for no austerity and not only for a change of economic system. It's a demand to reorganize European Union so it serves the mass of people and not the corporate elite. It is an extremely important movement. It raises the same questions that confront us in the United States. And indeed I would dare to say the issue already isn't whether the yellow vests will come to the United States. It's really only when I want next to turn to a book written in 2018, published in 2018 by a professor at the Stanford University Business School. His name is Jeffrey Pfeffer and the title of the book Dying for a Paycheck. And the book's idea is basically very simple, that modern capitalism around the world is making people die for their paycheck. It is raising the pressure of the workplace. And he uses above all the term stress to such a level that millions and millions of people are getting sick. A good number going to the hospital because of stress related illnesses. It's costing, he estimates, $300 billion a year to deal with the health costsor the health care costs of coping with stress. This is crazy, he says, and it should stop. I couldn't agree more. The book again Dying for a Paycheck, published by Harper. The only place I would disagree with Professor Jeffrey Pfeffer is that this problem isn't going to be solved by this or that reform. We have tried to reform the workplace. We have the Occupational Safety and Health Administration that tries to make the air and water good. We have limited hours, a 40 hour week. We have reformed it from here to tomorrow. But if we have a system that says to the company, you succeed, if your profit is high, you go out of business. If it isn't, you can't be surprised if you make profit. The bottom line that the shortcuts to get to the maximum profit involve stress and workplace conditions that are not good for people's health. The problem is the system. Mr. Pfeffer hesitant to say so, but that is the reality. Several of you asked me to deal with this Next topic, bail ins. Let me explain quickly what that is. Banks have a hard time because they often make terrible mistakes. That is they invest money by loaning it out to people and businesses who can't pay it back. When that happens, the bank is supposed to use the capital of the people who got together to create the bank, the capital of shareholders if they sell shares to the public to deal with their mistakes, to fix the damage of folks they lent to who can't pay it back. It's the job of the bank not to lend to people who can't pay it back. So when they don't get repaid, like happened on a massive scale in 2008 and nine, you know what the banks do? They don't want to use up their own money, so they go to the government to get a bailout. The problem is the politicians who give banks big bailouts as they did, get to be hated by the mass of people who understand very well what's going on, that private banks to make private money want the government to bail them out. And they don't want to have to do it, but the banks don't want to do it. So here's what the banks and the politicians got together. They found another sucker. You know who it is? The depositor. It turns out that the laws have been rewritten, starting with a bank in Cyprus that went belly up a few years ago to allow banks when they can't recover money they lent and should not have lent, they don't now have to go to the government to get a bail out. They can get a bail in. You know what that is? Taking money from the depositors who put money in the bank and simply taking it to recoup their own capital that they can't get back from the people they lent to. Is it legal to have a bail in to take the money of the depositor and not give it back to them? The answer is yes. In many countries, including the United States, the laws now allow a bail in. Should that upset you? Uh huh. Next update, Gentrification. This term that usually applies to real estate and housing doesn't have to apply to just that. Remember what it means in housing and real estate? It's when people with more money move into a neighborhood, renovate, fix up the places, driving up the rents and prices of homes so that the people who used to live there, who can't afford these higher rents and prices are forced out. It's a way of pushing middle and low income people out of whatever neighborhood rich people want to move into well, we're getting to have that in this country everywhere. I'm calling it the gentrification of the airline ticket. You know what I mean? It turns out that the latest trend among airlines is to charge up to $68 per person above the basic economy fare for an airplane seat. And what do you get for this? The. The right to have a seat assigned before you get there on the day of your flight. What we used to take for granted and do automatically is now going to cost us money. And if you don't want to spend the $68 to get a seat assigned to you, and maybe the person you're flying with, you don't have to. But then what happens is you save the money up to $68 a person, but you get there on the appointed day and you wait, and they'll give you whatever seat they have. And that may not be next to whatever person you came with, and it may be at the back of the plane and it may be with a broken tablet. Who knows? Wow, you're even making rich and poor have a different seat on the airplane. Pandering to those who have the money in a way that is extraordinary. My last quick update for today has to do with an idea brought to me by a wonderful listener named Joanne in the American Southwest. And I want to thank her for bringing it to my attention. Postal banking. What does that mean? Post offices around the world, in fact, over a hundred countries have what I'm about to describe to you. The post office provides financial services. You, you can have a savings account, you can have a checking account, you can have a credit card. You can get a loan. You can do all the things you do with a bank. But the post office provides you with an option. It's usually an option that's much more convenient because every post office has it. It's an option that's usually much cheaper because the government is providing it and the post offices already exist and the structure already exists and the trained personnel who already deal in money orders and other financial items or are already available, certified. It's perfect. It's a way to offer Americans, if we did it, cheap alternatives to banks. What banks? The banks, the large ones that have been caught over the last five years doing every illegal and every unethical thing banks are in a position to do. We should have an alternative, which we don't. Now, we also have a situation where people who live paycheck to paycheck often are short and have to go get something called a payday loan from some lending Agency charging hundreds of percent per year in interest. The Post Office could provide a cheap, convenient, reliable, better service for the mass of the American people. If the answer is it must be left in private hands, given how they've behaved and given their extortionate rates, then you really have to wonder whether we have a government that's there to serve the private interest or a government that's there to serve the mass of people with something they really need. A quarter of Americans are listed as either unbanked or inadequately banked. That is they don't have a bank convenient to them or they don't have enough money to make it worthwhile for the the bank to give them an account, etc. The post office can serve the mass of people with a much better alternative. It'll be a better alternative that also forces the private bankers, on pain of losing competition, to come up with as good or better service, which is as it should be. Funny how those banks always celebrate competition, but they don't want it from the government, even though their behavior makes it long overdue. We actually had postal banking in the United States from 1911 to 1967. It would bring more revenue if we let the Post Office do it, which the Post Office needs to run itself and to support the postal services. It's a good idea. It exists in a hundred countries. We ought to have a demand for it now. It's something the American people need and the only opposition is from the big banks in the United States and they have foreclosed. Any need to do that. Well, we've come to the end of the first half of today's Economic Update. Stay with us. We'll be right back. Welcome back to the second half of Economic Update. I'm your host, Richard Wolff. Before jumping into the major two topics we're going to deal with today, I wanted to remind you please to subscribe to our YouTube channel to make sure that you can find the materials you're interested in. To check our website democracyatwork.info and rdwolf with two Fs to follow us on Patreon and to basically understand that we want to partner with you that our websites as this program are ways that we want to help you be the kind of person who talks with your fellow workers, your neighbors, your friends, your family and so on so that a better understanding of what our economy is and how it works is can be disseminated throughout the society. Be a partner for Economic Update. That's what we hope to be with and for you My first topic is tax reform, and I want to pick it up by talking about a recent appearance on CBS's 60 Minutes by a quite flamboyant and important new member of Congress, Alexandria Ocasio Cortez. In the course of that interview, she proposed that the Green New Deal, she thinks is something that should happen here in the United States could and should be paid for by putting a 60 to 70% tax on the highest incomes in the United States. And she pointed out that we had that back in the 50s and 60s and 70s. In fact, we had even higher than that, as she pointed out. So that this is not something that we haven't done before and that those were years when economic growth was higher than it is now and therefore is not something to be feared, but something to be understood as part of American history and something we need now. The response of the media has been unfriendly, by and large, to her proposal. I don't find that surprising, but. But it is kind of nonsense. And the worst part of it is the attempt to do a little strange arithmetic, suggesting that there isn't enough money if you tax the rich to pay for the grandiose programs that people like Ocasio Cortez support. And she is not alone. She has support from Elizabeth Warren, Bernie Sanders and a host of others. What I want to do is to expand on what Ocasio Cortez said to point out that tax reform shouldn't be limited to the income tax. It should be across the board to all the taxes. Because over the last 50 to 75 years, all taxes in the United States, virtually every one, has been shifted from corporations who used to pay a lot to individuals and among individuals, it's been shifted from the top to the middle and the bottom. And, and to correct that, to reverse that is easy and will raise more than enough money to do a whole host of things that the American people need and want and deserve. I'm only going to give you four simple examples to show what tax reform could be to expand on what Ocasio Cortez pointed out. Lets go number one, the Social Security tax in this country. It already raises almost half the money that the federal government gets. In other words, the federal government gets roughly half from the income tax and roughly half from the Social Security tax, sometimes also called a payroll tax. Here's how the Social Security tax, a certain percentage is taken out of the your income for Social Security and it is matched by money provided by the employer. But here's the it's only the first $120,000, roughly. That gets this tax applied to it. So if you're a wealthy person, suppose you earn 200,000 a year, or 400,000 a year, or many millions a year. You don't get paid a Social Security tax on all of it. You just pay on the first 120,000. Since that's way more than the vast majority of Americans get, here's the the vast majority of Americans pay a Social Security tax, but the richest Americans, most of their income is not subject to the Social Security tax. That's unreasonable. That's unnecessary. The Social Security tax, which is designed to give us a society in which people, people who've spent a lifetime of working, are now retired and are decently able to live. That's something a civilized society does for itself. Everybody should pay their share of that. And if you applied the Social Security tax the same rate everybody pays to all of the income a person earns, then the wealthy would finally have to pay. And that would deliver billions of dollars in new revenue to the government for public services. And it would from the pockets of those most able to afford it. Good idea on both counts. Let me give you a second example. Capital gains are taxed at a lower rate than labor income. That's right. If you work for an hour using your brains and muscles, you pay a higher tax on whatever you earn for your labor than if you got capital gains. What is capital gains? It's when you buy a share of stock for $5, hold it for a while, and sell it for $10. The difference between what you paid 5 and what you get when you sell 10. That's a capital gain. Now, you didn't have to work for that. You didn't have to do anything. You just had to have something called money to play this game. And the income you earn is taxed at a much lower rate than if you would worked. Now, there's no reason for that. That isn't fair. That isn't appropriate. The argument that only if you give the capital gains folks a break will they invest has been disproved all over the place because we have many historical examples with higher capital gains tax and lower. And there's no relationship that we have to worry about here. And that would generate a huge amount of money. Let me give you the third example. We have a property tax. In the United States. Cities and towns rely heavily on a property tax. That's a tax that measures the amount of property you have and then puts a tax on that property, not on your income, on what you Own. But here's something you may not have understood. Property taxes apply to property and land. The value of the land you have, the value of a building you have, the value of the automobile you own, and the value perhaps of the inventory of your business. But here's the kind of property that isn't subject to a property tax. Stocks, bonds, cash. Wow. Wow. Now here's an interesting fact that may help you understand. The top 10% of shareholders own something on the order of 70 to 75% of the shares. By exempting what's called intangible property, property in stocks and bonds from the property tax, you're exempting the richest people in the country from paying a tax. You're making the property tax apply only to the property the mass of people have, a car, a home, some land on which the home sits, and so on. So if you wanted to be fair, you would extend the property tax to all property. Suddenly, trillions in stocks and bonds would be considered property subject to tax. And that would bring in a revenue that is way larger than what we now have and enable governments to do all kinds of things. And the fourth example, and by the way, there are more. But the fourth example is the inheritance tax. Not that many years ago, you could leave the first $600,000 worth of wealth when you die to your heirs tax free. They would only have to pay an inheritance tax on whatever was left to them when you die. That was more than $600,000. You know what the limit is today? 11 million per person. So for a couple leaving, say, their wealth to their children, 22, 2 times 11, 22 million dollars can be left with no tax attached to it. You know what? The United States was once a country where the idea, at least the majority idea, was we should all start equally, have an equal chance in life, so that our well being depends on how hard we work, how talented we may be, etc. We didn't like the idea that some people would start with a silver spoon in their mouth and other people with not enough to eat. We thought that was unfair, that two babies with no responsibility either way should start with such an unequal chance in life. And an income tax equals it if you apply it to inheritance. Inherited wealth should pay a tax. We once did that in the United States. We don't do that anymore. We could go back to what we did, generating enormous income from the government. And from who? From only the very wealthiest who leave, say, more than a million dollars or more than half a million dollars to their kids. Give them that advantage if that's so important. But 22 million per couple is extraordinary. So Ocasio Cortez was right more than she said. Tax reform can and should be done across the board, wherever taxes are unfair, discriminatory, because they're always unfair and discriminatory in one particular way. The more you have, the more the tax system has been manipulated and changed over several decades and at least since the Second World War, to favor those at the top at the expense of everybody else. The last item I'd like to talk about today is again, gentrification, which we talked about earlier. This process in neighborhoods, cities and towns across the country, where what you have is people coming in with a lot of money to a neighborhood which has a limited number of homes or. Or apartments in it. The rich people want to live there, so they come in and they bid up the price of the housing, they renovate it, they compete for it. And as the prices go up, of course, those who can't afford the rising prices are pushed out. Gentrification is just another word for the market system. Markets are institutions that favor the people who are the richest. Because what a market does is say when something is scarce, when more people want it than it's available, the way we're going to decide who gets it when there's not enough for everybody is by letting the price go up. Because then the only people who can afford it as the price goes up are the richest. Everybody else is forced out. That's an interesting way of distributing scarce items. Give it to those who are richest. My guess is most of you have a morality and ethics that doesn't like that so much, doesn't believe that the way we should distribute the scarcest thing is always and necessarily the market system. Give it to the richest. That's not really ethical, is it? You know, here in the United States During World War II, we thought that we would need a lot of resources to fight a war, which is true, and that the resources left for everything else, food, clothing and shelter for the American people would mean that those things would be scarcesugar, gasoline, milk, meat, and so on. So the idea was, well, we can let the market handle that. Well, if there's a lot of people who want milk, gas, meat, sugar, and there isn't a lot of it, they're going to bid up the price. And so the only people who will do well during the war are the richest people. Wow. That's not a way to build solidarity in a society. That's not how to bring a society together to fight a dangerous war. So we got rid of the market in all of those key items. We had ration cards. The government handed out cards to Americans according to their needs. We distributed milk according to how many kids you had in your family, not how much money you had because it was smarter. More solidarity among us, more ethical, more in line with our morals. Well, if it was true during the war, why not do it during the peace too? Letting markets be the institution is serving the rich. They're the ones who like that institution. For the rest of us, it makes no sense. There are better ways of distributing goods and services than allowing the market to allocate scarcity to to the richest amongst us. I want to thank you all for being with us today. It is a pleasure producing these economic updates. I look forward to the rest of 2019 as an opportunity to provide them as often as we do, as creatively as we know how. And I look forward to speaking with you again next week.