Richard Wolff (0:20)

Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives and those of our children. I'm your host, Richard Wolff. As usual, I begin by reminding you that Charlie Fabian is available to take your ideas, suggestions, criticisms of what we do on this program. And I want to thank you for all that you have sent in. You can reach him at charlie.info438mail.com and likewise, I want to remind you that we have this new book, Understanding Capitalism, which is something of a companion book, you might say, to this program. Many of the points we bring up here are developed in detail in that book and made accessible and understandable. It's like a course in what capitalism really is, punctuated by what we do on a weekly basis here, and I recommend it to you. You can find out more about it by going to our website, www.democracyatwork.info books. Today, we're going to be talking about a remarkable act by the Trump Labor Department. We're going to be talking about what Elon Musk proposes for Amtrak and the Post Office, the German decision to rearm, which those of you with a notion of history will want to think about long and hard. And then an analysis of Trump's tariffs. In the second half of the show, we're going to talk about a long standing obsession in the United States. And I mean that, an obsession with foreigners, a need and a tendency to constantly blame foreigners for the problems we have at home because it is so difficult to face the problems we have at home. It's a little bit like what we do sometimes in our personal lives when we blame others for something where we ourselves bear a good bit of the responsibility. So let's jump right in. The United States Labor Department and the Trump administration made a decision. Actually, Mr. Trump made it. He let everyone know he made it. He instructed the Labor Department to change the existing law. Under the existing law here in the United States, any business that does work on contract for the federal government is required to pay a specific minimum wage. It's not the same as the minimum wage in the United States, which is an extraordinarily low $7.25. Now, this is the minimum wage for people who work on a contract for the federal government. Okay, what was it? It was $17.75. It had been raised a while back. Mr. Obama, if my memory is correct, had set it at 1330 an hour and then it was raised to 1775 an hour. Now, during the first Trump administration, he didn't do anything about it. But now, in the second Trump administration, he has, and I want you to know what he's done and I want you to think about what it means. He chose to reduce the minimum wage, to cancel that part of the law, so that the government doesn't have to mandate or require those it contracts with to pay a minimum wage of 1775 an hour anymore. That will lower the wage to what it was before, or maybe even lower. It's important to understand it's one thing to allow inflation to erode what you can buy with your wage. It's another thing to directly diminish your wage. Hundreds of thousands, millions of workers work on contracts with the federal government. Those on the minimum wage are going to take a real hit. From 1775 to 1330 these days is quite a cut in your salary. Then there's Elon Musk, who recently said that he's in favor of of privatizing Amtrak and the post office. Now, this reminds me of a very old argument given by right wing business types. Here's how the argument Amtrak is not making a lot of money or it's losing. The post office is not making a lot of money or it's losing money. And now let's compare that with private enterprises. And you know, private enterprises, if they don't make money, go out of business, see how much more efficient the private is than the public. Now, I know it's not polite, and I'm going to take a moment to be impolite. This argument is fundamentally stupid. Let me explain why. If the Amtrak were going to charge the money, it would have to to be profitable, which it can do. It doesn't have competitors for many of its runs that would make it profitable. Not a problem. But you know who would pay for that? You would, and I would. And every business that uses the rail system would face higher costs by lowering the price. Having the government run the railroad, it operates like a subsidy to private enterprise. Part of the reason private enterprises have whatever profit they do is because the railroad system operates, at least in part, at a loss. The public won, and this is even more true for the post office, by having the cost of your mail lower. Yeah, the post office runs a deficit, but everybody else gets the benefit. The profits of every company are higher than they'd otherwise be. If they had to pay for the mail service, what would profit a private mail? And if Mr. Elon Musk is correct and wins and gets it to be private, not only will he be probably among those who bid to do it, he wants that profit, but he'll charge a price. And all of us will learn what I'm explaining that this was not a good idea. Good for Mr. Musk, good for the private profiteers. But for the rest of us, including lots of private businesses. No. Don't make stupid comparisons. They lead to stupid policies. Germany has announced it's going to rearm Germany. You remember World War I. You remember World War II. Those were preceded by German rearmament. Who's Germany going to fight? They're a small country relative to the superpowers, US, Russia, China. That army they're building is only going to be useful to intimidate perhaps other European countries. Germany is among the richest and the largest. Uh oh, do we really want to see this? And now the other countries looking at this, remembering the history, they're going to build up their armaments, too. And the Germans have made no secret, nor have the British, as to who's going to pay for making more armaments. It's that old story about guns and butter. Which is it you're going to use your resources for? Mr. Starmer in England is about to cut social services, to cut the benefits given to disabled British citizenshelping to fund money for Ukraine, money for the British, and maybe they'll rearm to deal with the Germans, their traditional enemies. Uh oh. The decline of Western capitalism takes its ugly forms one after another. And for the first half of this show's final update, I want to talk to you briefly about Mr. Trump's economic policies. And I'm going to take the example of our neighbor Mexico, because mostly we talk here about the impact on the United States and the whole world economy. But let's talk about Mexico, a very important country, our southern border, very important country. In the context of Latin America, what are Mr. Trump's actions doing? Well, I want to focus on something you may not have thought about. When you deport large numbers of people, when you block immigration, whatever else you think about that, here are some of the economic consequences in recent years. For example, Even last year, 2024, Mexico, our big example, received $64.7 billion in remittances. Here's what that Mexican citizens emigrate, leave Mexico, come to the United States. In the United States, they take jobs. That's what the overwhelming majority of them have to do. And do they pay taxes to the United States government on what they earn. That's the law. And they, more than anybody, do not violate that law because it would risk not just the usual penalties, but the risk, especially now, of being deported or otherwise harassed by the authorities. And they live frugally. Why? Because they have to not only pay taxes on their earnings, but they send money home to help their families, just as every other immigrant population in the history of the United States did. But for Mexico, it adds up to 4% of their annual GDP. It's an enormous support. And then I started looking into it, and here's what I found. For Nicaragua, it's 27%. For Honduras, 25. For El Salvador, 23%. For Guatemala, 19. For Haiti, 18 and Jamaica, 18. Huge benefit to those economies. They rely on it. If you don't let those people come in anymore, and we don't, and if you deport large numbers of them and we do, the remittances will stop. They already have. Now, you're hitting these economies with an incredible one, two punch. You are forcing back into that economy millions of American residents being pushed back. There are no jobs for them now, but there are going to be even fewer jobs because they can't bring any remittances anymore. They're not working in United States, they can't send money home. So the economy will contract. Just as millions of young, working age people come back looking for work. You know what you're doing to Central America? You're blowing it up. You're creating unlivable, dangerous, violent social conditions which will come back to haunt the United States, threaten the United States. Is anyone even asking the question, is this worthwhile, what we are doing to our own country by hurting all these people and these countries in this way? Forget just the hatred, the social disruption. We will be hearing and reading about it as Mr. Trump's policies work their damage. Stay with us. We've come to the end of the first half. We'll be right back with an examination of the foreign problem in the United States. Before we jump into the second half of today's show, I wanted to thank you for your very generous response to our fundraising efforts this year and in particular in the last couple of months. And in part responding to that, we are extending the availability of our limited edition, linen covered hardcover version of Understanding Capitalism, the book I wrote and that we have been making available now for quite a while. If you are interested, I will be signing copies of that hardcover and they will be available to you as they have been over the last few weeks. Just simply send an email to us@infodemocracyatwork.info and put in the subject line limited edition. We will send you all the information you need to order and receive Your copy signed copy of Understanding Capitalism in its hardback. And thank you again for your kind attention to the fundraising dimension of what we do. Welcome back, friends, to the second half of today's economic update. I want in this second half to talk about a problem that has interested me for many years. The remarkable tendency here in the United States, although similar things exist in many, not all, other countries, it's remarkable here in the United States that we have an extraordinary tendency to blame foreigners, people who are not American citizens, for the problems we have at home. And we do that to a fault. What I mean is foreigners may bear some responsibility, deserve some blame, that's often true, but they get away disproportionate excess of blame because we are unable very often to face our own problems. And I'm going to give you one past and one present example. But I think if you consider it, you'll notice it as I have happening over and over again in American history. So my first part, my example from history takes us back to the 1930s, roughly 100 years ago. Capitalism, our economic system, crashed October 1929. Suddenly, stock market fell apart. Executives jumped out of top story windows because they couldn't face their economic ruin. In a very short time. Between 1929 and 1933, the unemployment rate in the United States rose to 25%. One out of every four workers had no job. And that was a time when we didn't have unemployment insurance. So you didn't get any money. If you didn't have a job, your next step was to beg, stand outside a soup kitchen line run by a local church or something like that. You were desperate. If one out of four workers are not working, then every family in America had somebody who wasn't working. Uncle Harry, Aunt Louise and the rest of us were all worried if we had a job that we would keep it and we weren't getting paid as much as before. We were grateful for any job and we would accept one with lower pay, which was happening left and right. So we had an unemployed family member and less money in the pockets of those who still had jobs. It was very hard times, and it wasn't one of those short capitalist breakdowns. It started in October of 1929, and it lasted across the entire decade of the 1930s. That's why they got known as the Great Depression. We were all depressed. Those of you who read the novels of people like John Steinbeck, the Grapes of Wrath or Of Mice and Men, those were novels. And there were many describing the unspeakable suffering and Poverty and joblessness and loss of self esteem that afflicted American capitalism. But something remarkable happened. The American people. The American people rose up and said, this is not tolerable. We will not be treated this way. Bad pay, difficult jobs, massive unemployment, loss of social services. And so they turned politically to the left. I stress that because it's rather different from what we've been seeing the last few years when an angry, bitter part of the working class turns to the right. But let's go back to our story. They turn left. Here's what they they join unions. We had the greatest unionization drive in American history. Nothing like it ever before. Nothing like it ever since. The 1930s exploded as working men and women joined unions by the millions. These were people who had never been in a union before. These were people whose parents had never been in a union. They joined because they were trying to hold on. They also joined two socialists and one communist party. And they all became strong in those days. And they worked with the unions together they were known as the New Deal Coalition. They demanded a new deal in America. They came from all walks of life. They were all over the north, south, east and west. They were very powerful. They counted their strength in millions. And they went to the sitting President, Franklin Roosevelt, and they said, you've got to help us. You've got to do for the American people what no president before has done. And in very short order, under the pressure of these militant Americans, the President passed the Social Security system. That's why we have one. We did not have one before the first minimum wage. We never had that before either. The first unemployment compensation program at a federal level across every state. We never had that before. And we created public employment for 15 million Americans who stopped being unemployed because the federal government hired them. And where did the money come from to do this? By taxing corporations and the rich. And what we didn't tax from them, we borrowed from them. And what we used the money we taxed and borrowed from them for, to do for the mass of peoplesocial security, unemployment compensation, minimum wage and federal jobs. Fantastic. A president who taxed the rich to help the middle and lower classes. And what happened to the President who, who dared alone in our history to do that? He was re elected three times. Franklin Roosevelt was the most popular president the country had. So much for the argument that a politician dare not do that. Yes he does. He needs a lot of pressure from below. But now let's watch what happened. Not only did this New Deal coalition get the New Deal they wanted allying with the president. But it only led up to the real solution for the Great Depression, which had not been found before, because we got a capitalist system that makes solving these problems very hard. What finally got us out of the depression? World War II. Simplifying. We took half the unemployed who were in the millions and put them in the military. And the other half we put to work in the factories making the uniforms, guns, bullets, tanks and planes for the military. And that's how we put everybody back to work. But the corporations and the rich were very upset. They didn't like a president who did this. They didn't like to be taxed more than they ever had been. They didn't like to have to lend money to the government, not to benefit themselves, but to help the average person. So when the war was over, even though our ally in the war against fascism in Germany and Italy was the Soviet Union, Socialists, we did a quick reversal. Harry Truman was the president who pulled this one off. A little known and unrespected nobody from the Midwest. Yeah. What did he do? Here we go. He made the problem. The bad foreigner. What? Yes. All those militants who built the unions, the socialist party, the Communist Party were redefined not as the militants who won the best program the working class ever got from a president who supported the president who was the most popular in American history. No, they weren't celebrated. They were transformed. Literally overnight, between 1945 and 1947, they were transformed into agents of a foreign power. A story was made up. The Soviet Union, a very poor country in the far east of Europe. They are after us. They are going to get us. And worse, they have agents all around us. The socialists, the communists, the unionists, even the democrat is an agent to do. Unbelievable. And we had McCarthyism and we had a purge, the kind that Mr. Trump is trying to do again now. And, you know, we blame the Soviet Union and we blame. It's all foreigners, you see. It's not our capitalist system that doesn't work. It's not our noble working class heroes and militants who made something good happen out of that bad depression. No, no, no, no, no. The story has to be rewritten. Evil foreigners are after us, and their agents are among us. If you want to understand why Mr. Trump decided that migration is a problem, that those poor immigrants from Central America are something he's gonna fight against because they're foreign. And Americans seem to like to blame foreigners. Look at Mr. Trump. Canada, never done us any harm at all, is suddenly evil. To quote Mr. Trump. Nasty. They are nasty people. What? He can talk about them. This sounds like he used to talk about the Soviets and it should remind you of that. Mexico. Listen to Mr. Trump. The whole world is cheating us. Europe is cheating us. We're going to hit them with tariffs to fight back against these foreigners cheating us. The story of blaming them, it's always a foreigner. It's not a problem Here, for example, it's not a problem that we have 3% of our people who are employers and the other 97% are not. They're mostly employees. We allow the 3% employers to set the prices of everything we buy in the store and they do it to help them make profit for them, make them rich and us not. They're the ones who donate to the candidates. They're the ones who sit behind the president, the billionaires. Come on. You don't think we have problems at home we ought to deal with? Of course you do. Of course you do. Blaming the foreigner. Here's the part about it. It's not that the foreigners are blameless, of course they're not. No more or less than anybody else. But we live in a country that has made a very dangerous habit of not looking honestly or debating openly the problems we have as a society, and particularly our economic system that divides us into a small minority that own and operate the businesses and the rest of us that work from and buy from them. That's where we have to go. That's what we haven't done. And we shouldn't be fooled and misled by people who just want us once again to rev up the idea that those foreigners who are migrating in and those bad Canadians and those Mexicans and those Europeans who cheat us, come on, we're bigger, we're better, and we're smarter than all of that. Don't be fooled. Thank you for your attention and as always, I look forward to speaking with you again next week.